This was the headline in a morning Journal Sentinel story on foreclosures increasing 67% in the month of October. That is a frightening statistic, and it was no doubt intended to be; that attracts readers.
The story went on to mention that Wisconsin ranks 22nd in the country so far as mortgage foreclosures go, and then defined that ranking as equating to 1 foreclosure for every 997 mortgages. This represented 2,506 foreclosures in Wisconsin in October.
This is one-tenth of one percent of the estimated 2,500,000 mortgages in Wisconsin. That hardly strikes me as "soaring" but maybe it would if I were a lender ,or one of those whose home was being foreclosed. Nevada is reported to have a rate of 1 foreclosure in 154 home mortgages in October. That strikes me as "soaring".
Mortgage lenders made what are referred to as 'subprime' mortgages. These were mortgages made to people who were eager to own a home but probably not ready to do so in terms of their financial positions. These loans were adjustable rate mortgages (ARMs) that had initial 'teaser' rates for terms of from one to three years. Those rates are now being increased and that is driving monthly payments up by hundreds of dollars in some cases. Homeowners in that predicament are sometimes unable to juggle their income to cover such significant increases in costs.
That is predominantly what is happening in the mortgage marketplace. Lenders were over-exuberant. Regulators were lax. People were simply people. If I was renting and suddenly had the opportunity to buy my own home even without a downpayment in some cases, it would be difficult for me to resist the 'siren song'.
Now we have financial organizations crying 'wolf' and we have a government that is falling all over itself to bail the financial institutions out of this mess they got themselves into. We also have 'foreclosure mills' (per the Wall Street Journal) that are law firms that thrive on these situations. They are filling the courts with improperly-filed foreclosure actions.
Thus, we have a crisis. And, where there is a crisis, there are politicians getting their time in front of the camera. Our government is near a deal to freeze interest rates on certain subprime loans (again as reported in the Wall Street Journal).
Isn't it interesting that major financial institutions are able to extract government bail-outs when the citizens of Crawford and Vernon counties receive hardly anything to help them get out from under the recent flooding damage? Are the federal agencies involved because they wish to help the families that are beseiged...or are they involved because the 'fat cats' demand their assistance. It is probably a good thing that the people who are having the difficulties will derive some benefit from all this hoopla even though they are one of those 'unintended consequences'. The feds can't help the fat cats without also helping the 'little people'. This could be likened to the reverse of 'collateral damage'; this is 'collateral benefit'.
And, of course, the money being used is our money since government doesn't make money (except on printing presses). We make the money and then they take the money. Taxation is useful for social engineering.
By the way, another article this morning mentions that mortgage rates dropped to 6.1% in the past week. Isn't that ironic?
Genius may have its limitations, but stupidity is not thus handicapped. Elbert Hubbard
