More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.Then there are some anecdotes about actual strategic defaults, followed up by some speculation:
“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”So, it's fair to claim that the headline over-reaches, and the thesis is a bit of a stretch; but it's also worth considering—are these surrogate markers for strategic defaults? What is going on here exactly? It's an interesting and disturbing trend.
Ownership society is a slogan for a model of society promoted by former United States President George W. Bush. It takes as lead values personal responsibility, economic liberty, and the owning of property. The ownership society discussed by Bush also extends to certain proposals of specific models of health care and social security.
History
The term appears to have been used originally by President Bush (for example in a speech February 20, 2003 in Kennesaw, Georgia) as a phrase to rally support for his tax-cut proposals (Pittsburgh Post - Gazette, Bush OKs Funding Bill for Fiscal '03, Feb 21, 2003 Scott Lindlaw). From 2004 Bush supporters described the ownership society in much broader and more ambitious terms, including specific policy proposals concerning medicine, education and savings.
..if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country. - President George W. Bush, June 17, 2004posted by saulgoodman at 12:55 PM on July 9, 2010 [2 favorites]
We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004.
Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Bush chose to oversee them - an old school buddy - pronounced the companies sound even as they headed toward insolvency.posted by kirkaracha at 12:58 PM on July 9, 2010 [3 favorites]
As early as 2006, top advisers to Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Bush and his team misdiagnosed the reasons and scope of the downturn. As recently as February, for example, Bush was still calling it a "rough patch."
“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”But Mr. Khater apparently fails to consider that there are a fair number of people out there who have $1 million mortgages who aren't really rich, who don't have a particularly high net worth. It was possible, in the middle part of the decade, for a working couple making $100,000 each to qualify for a million-dollar mortgage loan. Many people in those circumstances did just that, in fact! But these are 40-ish people hitting their stride in their prime earning years, not professional baseball players or heiresses or what have you. Well-paid working stiffs. Many people took on these exotic instruments of finance (ARMs, interest-only loans, etc) based on the false premise that real estate never goes down. Then it went down, and one member of the family lost a job, and with your income halved and your mortgage payment increased by 50%, well, like it or not, you are going to default on that million-dollar loan.
But the devastation remains. One in ten Americans still cannot find work. Many businesses have shuttered. Home values have declined. Small towns and rural communities have been hit especially hard. For those who had already known poverty, life has become that much harder.The cognitive dissonance here is staggering. On exactly the same day, those two messages were delivered to the same audience. Maybe of the people waiting with bated breath for Steve's announcement, also voted for Obama precisely because they thought the former administration tanked the economy. And yet here they were, perpetuating the same consumer psychology actually responsible for destroying the American economy over the last 30 years.
This recession has also compounded the burdens that America's families have been dealing with for decades – the burden of working harder and longer for less; of being unable to save enough to retire or help kids with college.
More than half the mortgage professionals registered in Florida -- 120,563 -- entered the industry this decade without being licensed by the state, The Miami Herald found.posted by saulgoodman at 1:43 PM on July 9, 2010 [1 favorite]
Known as loan originators, they perform the same job as mortgage brokers but aren't bound by the same rules.
Time and again, industry leaders asked Florida regulators to bring this group under their watch by imposing mandatory licensing. But regulators refused to press for any changes, claiming that lawmakers would never approve.
The state's refusal proved costly during the biggest housing boom in Florida history: Thousands of loan originators entered the industry with criminal histories, state records show.
While The Miami Herald found breakdowns in the state's licensing system for mortgage brokers, the lack of controls over originators created even more problems for an industry steeped in the highest fraud rate in the nation.
The report says those in the lowest income group (making $12,499 or less) and the second-lowest group (making $12,500 to $20,000) account for 30.8% and 19.1%, respectively, of those unemployed during the fourth quarter of 2009. They also accounted for 20.7 and 17.2% of those who were underemployed. By contrast, those making $100,000 to $149,000 or $150,000 or more accounted for 4% and 3.2% of the unemployed, respectively, and 2.5% and 1.6%, respectively. of the underemployed.I mean, even the dullest idiot knows that the rich form a much smaller proportion of the population than the poor. The question is what the relative rates of un- and underemployment was within those groups, or at least the relative frequency of the whole group in the population, so those frequencies can be compared to the frequency among the un- and underemployed. Anybody have either of those numbers at hand?
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Natch! Because the US is a class-free society and by "class-free" I mean "the class warfare happens in only one direction".
posted by DU at 11:52 AM on July 9, 2010 [24 favorites]