Sunday, October 26, 2008
The Truth About Mortgage Foreclosures
It may come as a surprise to most people, but there is no national database of mortgage foreclosures that permit you to ascertain what the national rate of foreclosure is at any given time. There are a variety of county and state listings but they only reflect local variations in the economic substrate. Looking at the websites of firms such as RealtyTrac, the National Mortgage Association and others the following seems to emerge. Historically the home foreclosure rate has been about 1-percent per year. The delinquency rate has been about 5-percent per year. In 2008, despite all the hype, the financial meltdown and the sub-prime dilemma those rates have not changed significantly. Aside from local jumps in certain regions it is impossible to extrapolate those foreclosures into a national trend. It has been widely reported that 95-pecent of all homeowners are paying their mortgage on time. That is in keeping with what has been a historic trend. It is expected that one million homes will go into foreclosure this year. In a nation where there are 160 millions homes owned by individuals that is less than one percent. So why all the crisis-mongering? Could it be there is money to be made? Examining the websites of credit counselors and bankruptcy lawyers I found the following data. One out of every 114 homes face foreclosure; One out of every 445 homes face foreclosure; One out of every 775 homes face foreclosure. So who's right? If one million homes are foreclosed on in 2008 the percentage will be .00625 of all homes. That is 625 ten-thousandths; a very small number that is just over six-tenths of one percent, and is just over half the national average for the past few decades. I’m not sure on the math here but I think this comes out to 1 out of every 6,250 homes face foreclosure. This is not to say there is not a crisis. There is. Our government is both directly and indirectly responsible for the financial meltdown. There is no doubt that it had many willing partners in the brokerage, banking and mortgage industries, but the social engineering championed by both parties is the root cause. The willingness of those we elect to squander our tax dollars by providing mortgages to people who were not qualified and then to make it worse by permitting bankers to sell them in packages that could not be evaluated has lead us to the situation we are in. Throw the bums out has never had more meaning that it does today. It’s time for American voters to clean House, Senate and the Executive branch.