Why are there so many foreclosures?

Answer 1

There are a few reasons so I'll break it up into sectional answers.

Of course the economy affects EVERYTHING.

Families buy homes as they have always done. Unfortunately, the government leans in favor of business; especially financial businesses. So these families are not given the help they need to finance their homes when disasters, of whatever kind, strikes. They are just thrown out with no voice of authority on their side.

Investors buy real estate on speculation. They hold onto the property, trying to force false real estate values into the area so that they can make a profit. This can be accomplished in many way, but the most common is simply pretending that the area is zoned for future development. By this I mean that they will go to great lengths to pretend that new schools, parks and other things that families look at when buying a home. When the investors have finished, they pull out, leaving families in over valued homes, waiting for development that will never come. I have seen this quite a few times because I spent about five years looking for the best place to buy a home for my family. They went as far as to show me maps of future development, and some even had land cleared for the building of a school, which I found out later was actually designated to be a cemetery.

Answer 2

Some of the answers on here are not the truth,not that many lenders and or borrowers are that stupid.If you believe that that would be stupid.Lenders usually protect their rights over your.The cost of living has gone up dramatically in the past two years a steady increase and no end in sight just like gasoline prices and when you have to decide between food,clothing,medical,car the first thing you look at is mortgage that's because its usually the only thing that can be reduced by renting,the problem hit the consumer twice because the rents also went up and priced some people out of a home of any kind.I see no one understanding or having symphony but we will soon be a country without a home if someone doesn't do something constructive real soon.Also when the market was good house flippers bought up so much property in certain areas that an honest person couldn't buy a house at any price because it suddenly was way over their head.I don't see how this could be the fault of the home buyer buy the fault real estate agents who knew when the consumer did not.Don't be surprised when the taxpayer will be asked to bail out the already rich once again on the backs of the people.

Answer 3

It's because of sub prime lending, which, a few years ago, allowed just about anyone to buy a home - people who, before the sub-prime boom, would not have qualified for a home.
The sub prime loans taken out by people a few years ago recently started to 'reset' their interest rates. Usually there are two or three years where they get a low 'teaser' interest rate, and then after that the interest rate skyrockets, bringing their mortgage payment way up beyond what they can afford.

These people that got in over their heads with these loans couldn't pay the payment, and couldn't sell their homes because the market had slowed, and so the bank took the homes back and are now 'foreclosures'.

Answer 4

Easy. The house market skyrocketed the past few years, prices went up dramatically, and people were too stupid to wait it out. Now they owned overpriced houses, and when their other bills came in or emergencies arose, they had no money because of high mortgage rates. If you can't pay your mortgage, then you have to foreclose or sell it. But now that prices have come back down, who are you going to sell it to? You will owe more than anyone is willing to pay! Catch-22. That is why it is a good thing to do your homework before making such a purchase. The whole situation was predictable.

p.s. This may be one of the few times where I DON'T blame Bush. The President didn't make anyone pay too much for their house. Any expert on economics or the house market could have told these people what would happen. I wanted to buy a house a couple of years ago, saw the prices were too high, and so I continued to rent. I waited. Now I can go buy a house for a decent price and actually afford it. Can't blame the President for an individual's bad planning and a market that has been cyclical for the past 50 years!

Answer 5

With the economy the way that it is and all the living expenses going up, people are not able to maintain all that a home needs, such as insurance, taxes, windows, roofs, furnaces, and ac units.(There are a lot more but that would take up a lot of room ) There are many people that are just renting because they dont have to worry about those costs. As a landlord I know that my tenants appreciate that everything is in working order in the houses and that the heating and cooling costs are low due to good maintenence. If you look at the price of gas for your car, the cost of a gallon of milk, the cost of your utilities keep going up and up. If things keep going this way we will have another depression...Maybe if President Regan didnt deregulate this country we wouldnt be in the position that we are in.

Answer 6

Unfortunately folks are loosing their jobs, pays are being cut just to keep the folks working, but they're not earning enuf to make ends meet. Another thing are taxes that just seem to go up, but the wages don't. Therefore, they can't meet their mtg. payments & loose their homes. It's very sad. AND, even when the banks have foreclouser sales, there is no one coming out to buy up the places either. That was just in the news a wk. ago. The economy is just not at it's best at the moment. It's almost like there's no "middle man" anymore. You've either "got it" or you don't!!!

Answer 7

People accepted loans they could not afford. The president did step in and say that you can no longer give loans to people who do not qualify, but he did it a little late.

People can be seriously stupid, everyone who signed obviously READ that the payments would be X amount on such and such date but somehow thought that this would not happen.

Our whole society is living beyond their means. Most people have serious credit card debt from buying things they could not afford as well.

Answer 8

People don't have enough income to pay their mortgage.

Often because they got a variable rate, and planned on moving before the rate jumped, but with today's market house sales are very slow.

Answer 9

Because banks have loosened their requirements on mortgages and loans, approving even those with bad credit. Now all those not really worthy to get mortgages and loans couldn't pay up and their purchases are foreclosed.

Answer 10

A combination of 100% financing and declining home values.