I hate to disagree,.. but with foreclosures looming, and good decent credit worthy people unable to get loans.. it might not be as dumb as it sounds..
right now the real foreclosure numbers are being sanitized a bit..ok .. they are downright not being disclosed let alone published,..
Banks know how bad it is.. towns know how bad it is,.. and those sitting in homes waiting to get them foreclosed may feel alone.. but they are not...
so like any catastrophic catastrophe,.. sometimes drastic measures are needed,.. like lighting a back fire to slow a wildfire...
with the mortgages, we need a way to deal with them.. if we just foreclose it may take a decade just to process all the bad loans.. and that is an underestimate...
but if we start giving out loans to those who can afford the payments and then at predetermined points raise the amount of down payments required to slow the new market.. we may be able to get through the bad loans in a few years.. and then those deadbeats who are left over can be foreclosed..
Full Catastrophe Banking in 2011
6) Foreclosure Tsunami
Housing foreclosures may top nine million in 2011 and Goldman Sachs predicts the number will reach 12 million in the next few years. The result will be another significant drop in home prices in 2011 and even more families underwater. Civilized nations see the forcible migration of a city the size of New York as an economic and humanitarian catastrophe, but not the United States. The Obama administration and Congress have callously refused to take meaningful action
7) Bankrupt Cities and States Meredith Whitney, a research analyst who correctly predicted the credit crunch, is now warning that over 100 American cities could go bust next year. She anticipates billions worth of municipal bond defaults and warns: "next to housing this is the single most important issue in the U.S. and certainly the biggest threat to the U.S. economy." States are also in dire straits. The economic shock of mass unemployment on top of years of population decline, deindustrialization and the like have left cities unable to meet their obligations to taxpayers and retirees. With the austerity nuts in charge of the House, it may take a bankruptcy of a major player to prod an appropriate federal response to this looming disaster.
while the second article about states and cities may not seem connected but it is... many cities are not getting property taxes from properties that the owners stopped paying payments and are waiting out the foreclosure process.. as the rate of non payment increases so does the towns and states solvency.. payments in most loans include insurance and property taxes.. so if the payment to the bank stops.. so does the tax payment...
couple that with declining property values.. and ratables tumble.. along with the money they bring in... leaving towns facing angry voters who are not about to accept another property tax increase...
there is only one real solution.. get the properties back on the books by selling them... and with out financing.. no one can buy..
so yes we need to light a fire to put out a fire... or be prepared to deal with the housing crises for several decades.. and yes it is that bad... and it will get much worse...
commercial loans haven't started failing yet in epic proportions.. but their looming as well..
Obama really screwed the pooch on this one..
