Author Topic: Jacksonville Foreclosure impact Underestimated?  (Read 7352 times)

Metro Jacksonville

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Jacksonville Foreclosure impact Underestimated?
« on: March 12, 2008, 04:00:00 AM »
Jacksonville Foreclosure impact Underestimated?



City Council members Jack Webb and Glorious Johnson should be commended for their efforts to try to find a way to somehow slow down the rising number of foreclosures here in Jacksonville.  In 2007 there were more than 15,000 foreclosure filings on 9,540 properties in Duval County (many properties had second mortgages on them).  That is a 39% jump from the 2006 numbers.

Full Article
http://www.metrojacksonville.com/content/view/736

willydenn

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #1 on: March 12, 2008, 08:38:00 AM »
"Those who lent the money just to make a quick dollar should be investigated and prosecuted.  And the victims of these "predatory lenders" should be helped in as much capacity as possible.  Locally, we agree that victim advocate agencies such as JALA are the best resources for homeowners in this situation, but feel that it may be in the best interest of citizen tax dollars to limit any assistance beyond these types of situations."


Well said.  Individuals should not be bailed out for making poor decisions.  Doing so would only encourage more irresponsibility.

second_pancake

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #2 on: March 12, 2008, 08:48:30 AM »
Quote
We shouldn't be capitalists only up until the point that it starts to hurt a little because we made bad business decisions. 

Well put.

I just read yesterday that another very large lender and buyer of mortgage-backed securities, Lehman Brothers, announced it's cutting 5% of its workforce (around 1500 jobs) and they are expecting to write down their mortgage and other loan-backed assets by 9 billion (yes, I said BILLION) in the coming weeks.  No, this problem is not going away soon, and you're 100% accurate in your assesment that it is only going to get worse. 

This isn't something only affecting the sub-prime borrower, or the one trying to keep up with the Jones's that bought a house with a special or exotic mortgage product, that can no longer afford it with recent, or soon to be, rate changes.   This phenomenon is affecting the smart-buyer now as well.  With home values decreasing, those that have always paid their mortgages on a timely and consistent basis, are realizing that they not only have no equity in their homes but that they are upside-down.  They feel as if the money they've paid in to their loans hasn't benefited them to the point they thought when first purchasing the home, if at all.  They can't sell the property and move into something that is of equal value to their loan because no one will buy their home...not even at loan amount.  A friend of mine was finally able to sell his home after almost 2 years on the market.  He sold it with a loss, having to actually pay money out of his own pocket to payoff the mortgage loan.

To compound this problem, people are losing their jobs left and right.  The mortgage industry was huge here in Jacksonville and within the last 6 months, I know of at least 4 companies that have gone tits up.  There is so much competition for mortgage related jobs on the market, that it could take a year or more for many of these folks to find a job that would replace their previous salary.  These are our future foreclosures; the former employees of the lending and servicing institutions.

Now, to add to this further, the rising cost of gas which is driving up the cost of food and other products that are shipped to us via gas-powered machinery.  I've seen more cyclists commuting to work than I ever have (previously, it was only me on my route), and I've seen 3 of those Smart cars driving around already.  People are trying to find ways to save money and a big part of that is doing an assesment of your lifestyle and knowing when to cut your losses, and the house is often the first thing to look at, especially when now it is a renter's world and you can rent a house with over 2000 sq. ft. for $1600 a month.  It makes walking away from your home look better and better.

Anyway, my wish is that the worst will just hurry up and happen so we can all begin the rebuilding process.  I don't like this hanging-in-the-balance stuff.
"What objectivity and the study of philosophy requires is not an 'open mind,' but an active mind - a mind able and eagerly willing to examine ideas, but to examine them criticially."

Driven1

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #3 on: March 12, 2008, 10:01:38 AM »
second_pancake - you are right in your asessment that only adding fuel to the fire will be jobs cut over the next 6-9 months as we move into the recession....already there are rumors of a 10,000 job layoff at Citi

stephenc

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #4 on: March 12, 2008, 11:05:47 AM »
Didn't Citi just cut a few thousand jobs last year? Sure glad I dont work there anymore!

Driven1

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #5 on: March 12, 2008, 12:41:16 PM »
this is hilarious!!  from an online teen columnist...

Quote
Spend your money wisely. That's the important lesson people have been pounding into their kids for years.
But maybe it's time for adults to rethink wise spending as well.
With foreclosure becoming such a big issue, you would think people would do a reality check before buying houses.

continued here...
http://www.tucsoncitizen.com/daily/opinion/79205.php


RiversideGator

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #6 on: March 12, 2008, 01:02:22 PM »
The best thing is to do nothing.  Allow the market to hit bottom and the sooner the better.  Then, the weak and poorly capitalized will be weeded out and things will begin to improve.  I think we may be very near to bottom though as this is now the 2d year of the downturn locally.  We shall see.  Things wont turn around overnight but the people sitting on the sideline and those who are moving here will eventually begin to buy homes again.

Driven1

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #7 on: March 12, 2008, 01:30:43 PM »
I think we may be very near to bottom though as this is now the 2d year of the downturn locally. 

from "Not even close to a Bottom"...
http://seekingalpha.com/article/67789-nowhere-near-a-real-estate-bottom?source=metrojacksonville.com

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It simply takes time for people to recognize that even real estate markets can fluctuate on the down side.

In general, this will always result in a real estate market that lags the general economy. Thus, anyone who accepts the preceding statement as reality should easily recognize the ridiculousness of predicting a real estate bottom when we haven’t even experienced the recession yet!

Television news is almost always about someone else and people have difficulty recognizing when they are the subjects of a story. It’s one thing for other people to be suffering from a real estate collapse, but "surely that won’t happen in my neighborhood." People have been bred by the financial industrial complex since childhood to believe the family home will always be their best investment. Re-educating millions of Americans is not a simple task.

When you take into consideration the shear magnitude of this bubble, the largest credit bubble in American history, you must sober your hopes for a shallow recession. When home owners take interest only adjustable rate mortgages and have zero equity, why would they struggle to make increasing payments? As equity disappears, people all over America will be walking away from their mortgage in their millions, often leaving behind dilapidated properties that not only allow banks to recover nothing, but incur extra costs to dismantle the unsafe building.

The banks don’t have a clue what’s going on, and these insignificant write offs we have witnessed to date are just a fraction of what is to come. Bernanke is now even recommending that banks reduce mortgage principles to restore owner equity and give people an incentive to remain in their house. He would not be recommending such a drastic plan unless the alternative is much worse.

This crisis will not be cleared in a few months - perhaps not even a few years.

and the VERY BEST article on the subject came from Mish on Feb 18th, entitled "Housing Bottom Nowhere in Sight"...
this image says it all (our current situation and what led up to it is almost a replica of what occurred in Japan)...
http://bp1.blogger.com/_nSTO-vZpSgc/R7UR_6MbZpI/AAAAAAAACJM/xU6Nt4fkx5k/s1600-h/japan-land-prices-update-2008-02-rgb-176-10-10.png

entire article (extremely worthy of reading) here...
http://globaleconomicanalysis.blogspot.com/2008/02/housing-bottom-nowhere-in-sight.html?ref=metrojacksonville.com



« Last Edit: March 12, 2008, 01:32:36 PM by Driven1 »

thelakelander

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #8 on: March 12, 2008, 01:41:31 PM »
It would be interesting to see how certain neighborhoods are faring compared to others.  Although the general market may be bad, there may be certain segments, such as "affordable housing", or places with unique physical conditions that haven't not been as negatively affected as others.
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second_pancake

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #9 on: March 12, 2008, 01:46:51 PM »
Quote
Things wont turn around overnight but the people sitting on the sideline and those who are moving here will eventually begin to buy homes again.

Unless you're talking about independently wealthy individuals who don't have to obtain a loan to purchase a home, the borrower has to first be able to get a bank to lend them money.  With MUCH tighter restrictions on lending, including increased requirements for down payment (I don't know of anyone even willing to talk about doing 100% LTV), the only people who will be able to obtain a loan are those who have stellar credit.  The prime rate has no bearing at all on whether or not new loans are originated, it all has to do with the parameters under which the lendors can and are willing to lend.

Anyone who is in the market for a new home right now is either a renter or someone that has a home and is trying to sell it to get into something they can afford.  If you're a renter, then you have your pick of the lot and you will probably do fairly well for yourself.  If you're a homeowner, you're screwed.  By the time you wait around for the market to pick-up to buy a new home, you won't need one.  You'll either have lost the one your in to foreclosure because you couldn't make the payments, or you'll have struggled through and survived somehow and will simply refinance to prevent any heartache in the future.

The scariest thing I heard as of late, is talk about the FDIC stepping in to loosen restrictions on lending to try and increase the rate at which lenders originate loans so borrowers can take advantage of the lower rates the fed put in place.  Talk about disasterous.
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RiversideGator

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #10 on: March 12, 2008, 11:24:32 PM »
All this negativity is amusing.  It is actually the complete inverse of the talk I heard 2 years ago when people were saying that real estate could never decline in value.   ::)

RiversideGator

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #11 on: March 12, 2008, 11:25:50 PM »
It would be interesting to see how certain neighborhoods are faring compared to others.  Although the general market may be bad, there may be certain segments, such as "affordable housing", or places with unique physical conditions that haven't not been as negatively affected as others.

Affordable housing and very high end housing are less affected from what I see.  It is the moderate to high priced properties which are suffering most.

RiversideGator

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #12 on: March 12, 2008, 11:30:27 PM »
Quote
Things wont turn around overnight but the people sitting on the sideline and those who are moving here will eventually begin to buy homes again.

Unless you're talking about independently wealthy individuals who don't have to obtain a loan to purchase a home, the borrower has to first be able to get a bank to lend them money.  With MUCH tighter restrictions on lending, including increased requirements for down payment (I don't know of anyone even willing to talk about doing 100% LTV), the only people who will be able to obtain a loan are those who have stellar credit.  The prime rate has no bearing at all on whether or not new loans are originated, it all has to do with the parameters under which the lendors can and are willing to lend.

Anyone who is in the market for a new home right now is either a renter or someone that has a home and is trying to sell it to get into something they can afford.  If you're a renter, then you have your pick of the lot and you will probably do fairly well for yourself.  If you're a homeowner, you're screwed.  By the time you wait around for the market to pick-up to buy a new home, you won't need one.  You'll either have lost the one your in to foreclosure because you couldn't make the payments, or you'll have struggled through and survived somehow and will simply refinance to prevent any heartache in the future.

The scariest thing I heard as of late, is talk about the FDIC stepping in to loosen restrictions on lending to try and increase the rate at which lenders originate loans so borrowers can take advantage of the lower rates the fed put in place.  Talk about disasterous.

100% LTV loans should never have been offered in the first place.  But, I believe 95% LTV loans, insured by the feds (FHA), are still available.  Am I right?  Certainly, coming up with $10,000 or so is not a complete bar to homeownership for most people.  I think the worst thing now is that people dont want to buy until they believe the market has hit bottom so they live in fear waiting for this to happen.  Ultimately, pent up demand will kick in and buying will resume.  And, dont forget, houses are still selling in numbers higher than they were even a few years ago in say 2000.

RiversideGator

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #13 on: March 12, 2008, 11:38:31 PM »
The banks don’t have a clue what’s going on, and these insignificant write offs we have witnessed to date are just a fraction of what is to come.

This is priceless.  Banks dont have a "clue" what is going on, but some permabear blogger has all the answers.   :D

BTW, Japan's real estate bubble was much greater in scope and the decline was not handled properly by Japanese officials who refused to let companies fail.  That does not appear to be happening here although there is some of this happening.  In any event, where did this happen in the US:

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At the height of the bubble, a commonly-quoted claim was that the land beneath the Imperial Palace in Tokyo was worth more than the entire state of California. Japan regained a sense of national pride and assertiveness as a result of its new power, which manifested itself in works such as The Japan That Can Say No by Shintaro Ishihara and SONY founder Akio Morita. Many outside Japan were alarmed by this resurgence, leading to criticism from foreign observers. Michael Crichton, for example, wrote Rising Sun at this time, which highlighted US concerns with the growing Japanese economic power.

Prices were highest in Tokyo's Ginza district in 1989, with some fetching over US$1.5 million per square meter ($139,000 per square foot), and only slightly less in other areas of Tokyo. By 2004, prime "A" property in Tokyo's financial districts were less than 1/100th of their peak, and Tokyo's residential homes were 1/10th of their peak,[citation needed] but still managed to be listed as the most expensive real estate in the world. Some US$20 trillion (1999 dollars) was wiped out with the combined collapse of the real estate market and the Tokyo stock market[citation needed].

With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were made increasingly out of the country, and Japanese manufacturing firms lost much of their technological edge. As Japanese products became less competitive overseas, the low consumption rate began to bear on the economy, causing a deflationary spiral.

The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses, creating many "zombie businesses".
http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

Driven1

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Re: Jacksonville Foreclosure impact Underestimated?
« Reply #14 on: March 13, 2008, 12:37:01 AM »
River...let's put our money where our mouth is.  that is the truest test of whether you really believe something about the economy or not, right?

my new investment dollars are going to cash, commodities and agriculture. 

yours must be going to real estate and financial stocks now, right? 

;)