This is the beginning of an American fiscal revolution. Life as our parents knew it may well be beyond future generations for some time to come. Simply put, what was once a burgeoning real estate market, with couples purchasing "McMansions"- and single men and women investing in condos, expensive cars and SUV's may well be fiction for future generations.
The subprime crisis is just the tip of the iceberg. There is a great chance that fundamental changes in the economy and the resultant social upheaval, may create overcrowded tenements out of today's McMansions. The handwriting is on the wall""or, in the classified section and legal notices of your daily newspaper.
If my eyes didn't deceive me, my hometown daily newspaper just broke a record for foreclosure listings last week, with nearly 7 pages devoted to sheriff's foreclosure sales. All of that ad revenue may make the newspaper's bottom line stronger, but it's a hell of a note for the housing industry and homeowner.
The classified ad gravy train of foreclosure notices is proof positive that the nation's real estate market has become an infected carcass, which may well give the nation's economy a massive case of "fiscal food poisoning"-. And just to think that it all got started because of the dangerous addiction some of our "leaders"- have to privatization and deregulation.
One angry activist put it this way: when the economy is good, "conservatives"- howl for deregulation. When the economy goes belly up and deregulated businesses fall like dominoes in a tornado, then the former "get gubmint off our back"- folk yell for government assistance, bailouts and support.
It's enough to make a taxpayer throw out the whole bunch, but we can't say this mess is unexpected. I predicted major agony in the real estate market in a series of articles nearly a year ago.
Deregulation, arrogance, greed and criminal collusion has created a magnificent platform for industry insiders and outside fraudsters to plunder borrowers and banks at will. The sheer volume and extent of the funds involved are mind boggling and the intricacies of the investigations and research necessary to smoke out the crooks and expose the dirty secrets of the mortgage banking industry are often far beyond the average law enforcement investigator, or local reporter. (Mortgage Meltdown; the Lying, Crying and Fire Sale Buying Begins. 12-22-07. Kansas City Ezine)
It doesn't and didn't take a rocket scientist to understand that when good jobs are outsourced overseas, those former job holders won't be able to pay conventional mortgages, sub-prime mortgages, or adjustable rate mortgages. And the places they bought their cars, trucks, big screen tv's, ATVs, boats, bling and things lay off employees or shut down because business went to Outsourceland in a handbasket.
No job, no money, no bill payment--crash goes your finances, and the nation's economy.
Crash goes an economy where government regulators are either non-existent, or shackled by industry friendly regulations. Up go the foreclosure rates, down goes the housing values, and on and on and on.
While the bought off, clueless and deluded continue to blame homeowners for "buying too much house, with too little income and not enough financial disclosure"-, the reality of the situation is that those who have good credit are getting stung as well.
The person whose job was "-outsourced' now can't find a comparable job, can't pay his mortgage, or has little incentive to do so, even if he found a comparable job. Because housing prices are falling like rocks, he now owes more on his mortgage than the house is worth, and he can't afford to throw good money after bad.
He's close to walking away from the house all together, but the only thing stopping him is the fact that if he did that, his credit would be so bad that the probably couldn't rent a decent apartment. And to make things even worse, the rent on the apartment may well be far more than his house payment.
Just another case of the little guys getting the shaft, and the big guys literally walking off with the bank, or two, or three. The bankers are getting bailed out for knowingly writing loans when they saw the train roaring down the track, but the home owner, home buyer and would be buyers are getting the shaft.
Some purchasers, like the scores in local newspapers, foreclosure ads and courthouse auctions are getting thrown out of homes that they have sunk their lifesavings into. Others are so fed up that they are just mailing the keys back to their lenders and are walking off. And a few, enraged at the whole process, are taking sledgehammers and baseball bats to walls, fixtures and plumbing, venting their rage on a house which was the largest investment of capital that they had ever made.
Lenders, swilling in fiscal poison of their own making, are now getting "responsible"- and are cracking down on asset documentation and up front money. They are now requiring actual verification of income and have upped the down payment requirement to as much as 40% in some markets, even as they hold billions of dollars in rapidly depreciating real estate, which, in some markets is turning into the nation's newest urban nightmare.