Economics, U.S. Economy

New study shows devastating foreclosures on the rise

Image credit: Respres (Flickr) (CC-BY-2.0)

Image credit: Respres (Flickr) (CC-BY-2.0)

My new groundbreaking study out this morning –noted by Gretchen Morgenson of the New York Times– reveals never-before-available data at the zip-code level on projected foreclosure rates for families getting FHA loans nationwide. The results are dramatic: Nationally, there are over 9,000 zip codes with a projected foreclosure rate of 10% or more on FHA-backed loans. On average in these zip codes, 1 in 7 families will likely lose their home to foreclosure.

Check out the new website, which features interactive maps for 11 major cities, including Washington, DC, New York City, Chicago, and Atlanta.

Federal Housing Administration’s (FHA) current policies are financing failure for working-class families. The terms of the FHA loans are putting families on a tight-rope, where they could be ‘one car repair’ or ‘one lost work shift’ away from losing their home. The combination of low-down payments, poor credit, high debt-to-income ratios, and slow loan amortization sets families up for failure. The resultant foreclosures — along with destroyed credit and loss of the very equity families were working to build — dashes their dream of home ownership.

For more information, please visit www.NightmareatFHA.com for an interactive look at the harm FHA has caused in neighborhoods across the country.

12 thoughts on “New study shows devastating foreclosures on the rise

  1. Ah, it’s old “Fast Eddie” Pinto, delivering some hate filled “analysis” to keep tabs on “dat big bad gubbamint meddling.”

    Eddie writes: “Nationally, there are over 9,000 zip codes with a projected foreclosure rate of 10% or more on FHA-backed loans. On average in these zip codes, 1 in 7 families will likely lose their home to foreclosure.”

    IS THAT RIGHT?? WHY, THAT’S SHOCKING, EDDIE!!

    What’s shocking is that a guy who has set himself up as an authority on real estate financing didn’t know that even during “normal” times, i.e., pre-bubble, the FHA foreclosure rate was north of 7% anyway.

    Gee- 11 million people lose their jobs and the foreclosure numbers don’t improve? Wonder how that happens.

    As discussed before, and in response to the pathetically ignorant Ms. Morgensen, FHA is going to have to deal with the detritus of the crash. Surely it comes to no suprise that the less well off lose their houses at a faster clip than the well-to-do, but as Mr. Perry points out with his ever incessant cheer, rising home values will insure that anything written up AFTER 2008 will probably enjoy an exceptionally low foreclosure rate.

    You would think the Pinoto/Wallison road show, having been mercilessly ridiculed by everyone in the housing and mortgage industries would stop embarrassing themselves with this twaddle, but so long as they are paid to do it, and can find no gainful employment elsewhere, I’m afraid we’ll just have to listen.

    • You’re not saying 1 in 7 is 7%, are you? Because that would be “pathetically ignorant” and should be “mercilessly ridiculed”, don’t you agree, Max? I’ve been reading your posts and I think you’re being paid. I wonder who’s paying you. Do you get paid by the word, because your posts are painfully long-winded, just *dripping* with sarcasm, and you seem to think you know something.

      • Let’s go play the video tape again:

        “Nationally, there are over 9,000 zip codes with a projected foreclosure rate of 10% or more on FHA-backed loans.”

        Again, FHA default rates have always been high, but we never gave a crap because the borrower had self insured, and the taxpayer was never on the hook. There are, according to Google, over 43,000 Zip Codes in the USA. To have a foreclosure rate over 10% in 7000 of them not only shouldn’t be surprising to anyone with a functioning brain, it may even be cause for celebration in the midst of the worst f&&king economic turndown most of us have ever witnessed. And note: THESE ARE “PROJECTED” NUMBERS, NOT REALITY.

        So, like everything else “Fast Eddie” has written, his complaints are hollow, and can be relegated to the mutterings of a third rate demagogue.

        “On average in these zip codes, 1 in 7 families will likely lose their home to foreclosure.”

        “Likely?” Let’s see. Fast Eddie has a taste for stretching the truth. Actually, that’s too kind. He doesn’t deploy the truth at all.

          • Mr. Pinto worked for FannieMae some time ago.

            He was canned. The reasons aren’t clear. But he hasn’t stopped his crusade against anything having to do with housing policy, even when it’s worked.

            I know who I’m dealing with here. Pinto is no “expert.”

          • BTW, as regards my credibility: when you have people on this forum who can simply ignore the numbers staring back at them and just deny them, clinging to their tautologies like zombies, you ought to question THEM.

            If anyone wants to refure me on the FACTS on this issue, and at least have the intellectual honesty to acknowledge them, I am ready, willing and able to counterpoint.

            And that includes any AEI shill.

    • “What’s shocking is that a guy who has set himself up as an authority on real estate financing didn’t know that even during “normal” times, i.e., pre-bubble, the FHA foreclosure rate was north of 7% anyway.”

      Since you did not quote your source for this information, I took a moment to research it, and here’s what I found:

      See “Extended MBA FHA and Conventional Foreclosure Rates: 1950-97″ on pages 21-22
      http://www.fdic.gov/bank/analytical/working/98-2.pdf

      FHA foreclosure rates, according to this chart, were never higher than 2.47% during these “normal” times.

  2. If Max weren’t being paid or otherwise assigned to be Mr. Pinto’s designated stalker, he would have said so. He didn’t. If he denies it now, he has no credibility.

    And Max, why oh why hasn’t the economy come back like it has from every other post-World War II downturn?

    • “If Max weren’t being paid or otherwise assigned to be Mr. Pinto’s designated stalker, he would have said so. He didn’t. If he denies it now, he has no credibility.”

      I am not being paid- but I presume Mr. Pinto is not producing this rubbish for his health.

      “And Max, why oh why hasn’t the economy come back like it has from every other post-World War II downturn?”

      If you have to even ASK that question, there’s no point in getting started with you.

      Have a nice day.

      • You don’t have an answer that doesn’t involve CRA, Fan, Fred, and Democrats wrecking the economy — and you don’t want to get started with me.

        • “You don’t have an answer that doesn’t involve CRA, Fan, Fred, and Democrats wrecking the economy — and you don’t want to get started with me.”

          It doesn’t, and I believe I’ve proven that. If either Mr. Pinto or Mr. Wallison want to do-wah-diddy with me, let them come forward and demonstrate the strength of their arguments. But they won’t. Because all three of us know they’re lying.

          Don’t try to lay no boogie-woogie on the king of Rock and Roll.

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