the human side of the economic crisis

[_rck_]

The new numbers for August are in and we are looking at 304,000 homes in "some state of default" and 91,000 families losing their homes. And this is all, as I just said, during the month of August

Comments

[xiuzan]

and that's totally unrelated to the ones that lost their homes in E. Texas. I have some friends who lost their house and because it was old and added onto, it didn't meet code and was uninsurable :(. Thankfully, they were in good financial standing and locked in a mortgage rate on a new home just last week. So they have a place to move now, just no belongings. Here's hoping FEMA can give them a little to get them started in their new home.

[_rck_]

good point--and that's economically significant too, you are right

[ishaa]

Careful with your terms there. Is a house the same as a home?

Besides your caveat about speculators, I would submit that:

- we're not talking about homes that the owners have lived in for 50 or 20 or even 10 years here; we are talking about houses purchased in the last few years

- or sometimes we are talking about homes that are in foreclosure because of second mortgages or home equity lines of credit, those are people using their houses as ATMs, not a careful investment

- an equivalent dwelling can be rented for less than the monthly mortgage payment; and of course a smaller one can be rented for even less. Has anyone actually been made homeless by these foreclosures?

And that's without even getting onto my soapbox about living within your means and reading the fine print.

[_rck_]

I am not sure that you have to be made homeless. When the mortgage crisis started, the NY Times ran pictures of children watching the people from the bank (presumably) putting the furniture out onto the lawn.

It is probably not the case that this is what happened to all 91K families, but I think that experience is traumatizing enough.

I may also be a bit confused about what foreclosure actually and technically means. Is the family financially restored by their house being taken over by the bank? Because if not, they might have to settle for a significantly smaller house or apartment--and not because anyone wants to.

Unfortunately, people who do not have the financial acumen to live within their means nor the conceptual patience to read the fine print still need houses to live in.

[ishaa]

Is the family financially restored by their house being taken over by the bank?

They might end up making a deal with the bank to stay in the house;
They might walk away with neither assets nor debts;
they might walk away owing tens of thousands of dollars still:
and either pay it down over time like any other bad debt,
or declare bankruptcy.

Unfortunately, people who do not have the financial acumen to live within their means

We cannot possibly assume the risk for all such people.

nor the conceptual patience to read the fine print

Now, as for this, I do think the types of loans in question should have been illegal -- like high-interest payday loans. I am certainly willing to have the government step in to that degree.

the NY Times ran pictures of children watching the people from the bank

That is indeed moving, but anecdotal.

I guess you didn't really draw any conclusions about public policy or anything -- you said something more like "I feel bad for those families." Okay. I do too.

empathy indeed

[_rck_]

Yeah, I wish it wasn't that anecdotal either. The 91K families number is just as weasly, if you think about it--and the connection to the moving pictures is suppositional at best.

I am indeed not sure about the public policy implications, and I do like all of your suggestions and comments regarding those.

The picture may also be colored for me by the fact that the move into a smaller apartment was a big deal for the children and for _MWife_. There are many things the kids liked, but there are things that are clearly more difficult now. We still haven't unpacked all of the toys, because it is not clear where to put them, to name just one example.

Now, we did this as a conscious decision, and _MWife_ sold the children on it by taking them to the pool and getting them all excited about the switch that way. But you know as well as anyone that children are not stupid and they know exactly which things bother their parents and which do not