What is the reason for 900,000 homes being lost to foreclosures , the economy or personal debt?

Answer 1

Personal debt.
People think they need to have all the toys right now.
The big house and big cars.
It doesn't matter if they can afford it or not just sign on the line.

This old myth about we need two incomes to make ends meet needs to be wipe out.

You can make it on one income if you live with in your means. Buget and save money.

The other myth doing it all for the children.
The #1 thing kids want is time with their parents not toys.

I have seen guys who own those big homes and when they come home so tired they fall asleep to wake up and to go work again.

They buy the SUV and complain when gas prices go up.

If people get a budget and live within that budget they will be fine.

Answer 2

I think it's the combination of several factors. We've seen a rise in predatory lending, where sub-prime lenders seek out people who obviosly don't qualify for any home loan and then talk them into loans that they know the homeowner won't be able to pay back. We've seen a rise in more lenders only qualifying borrowers for sub-prime mortages even when the borrowers qualify for a prime rate loan. We've seen borrowers bite off more than they can chew (buying more house on ARM than they could afford, even if they would qualify for a fixed rate on a less expensive home). There has always been some ignorance among new homeowners about how the whole process of buying a home works and a trust that lenders will act professionally and honestly with homeowners (which has been in large part broken recently). We've seen some borrowers who did their homework, bought exactly what they could afford with an ARM, and could afford the higher mortage once the rate readjusted when they first took the loan out, then lost their income by losing a job or divorce.

Answer 3

It is a combination of all theses factors not just one thing,people just want to live and they would rather live in what they choose than some rent place,I don't blame the people so much as I do the ones in the know they had to know what they were doing,and sometimes no matter how many questions you ask you still don't get the BEST infomation,and all it takes these days to be on the street is to miss a couple of payments,lose a weeks paycheck,have a real emergency or get sick and since all these things are out of your control I don't think losing your home is right in fact I think it is downright theivery in some cases it is.Just talk to someone in that position and you will see short of an act of god,they really was at their last recouse hopefully you will never be one of them.Been there myself.

Answer 4

Some are due to unfortunate causes such as unemployment, medical issues, or other catastrophic losses. Most are due to people buying more house than they can really afford, and being duped into signing non-traditional mortgage loans with sub-prime or adjustable rates that shoot up after a short time. People are impatient, greedy, and desire to have that status symbol of a big house in a new subdivision, which unfortunately they won't really be able to afford, much less furnish or maintain. Unfortunately there are way too many mortgage brokers out there looking to make money on these people.

Answer 5

A big part is bad loans. They came in two forms. Loans to people who shouldn't have received them (bad credit, the subprime lending market). And the "exotic" loans, mostly short term buydowns of the interest rates and other ARMS which have the payments suddenly increase after a couple of years.
The economy and debt don't have so much to do with it.

Answer 6

I read an article about this; it has something to do with 'special interest rate' programs which were so widely available a while back. There was some type of 'hidden' statements, which most people knew nothing about, and now their interest rates and payments have nearly doubled (or more - similar to 'balloon payments') and they can't afford to live in their homes anymore.
When something is too good to be true - then it most likely not good; as was the 'special interest' offers.

Answer 7

It actually is both. Mostly, however it's supposed to be because of ARM (Adjustable Rate Mortgages), that got many people into homes in the 80's. Now that their mortgages have gone up because of the rates, they simply cannot afford them.

Answer 8

A combination of both for sure, with a few other things thrown in, like consumers who do not understand everything about the mortgages that they sign for. It's pretty sad.

Answer 9

greed personal debt, believing that the home market is a one way street up up and up.