I'm right, two years late.

[dsrtao]

http://feeds.feedburner.com/~r/ConsumerLawPolicyBlog/~3/125064528/home_foreclosur.html

Summary: US mortgage foreclosure rates are at a 50 year high.

My prediction (made in the 2001 timeframe): all those idiots buying houses that they can't afford on 5/1 ARMs and other silly mortgage products are going to be really unhappy when the interest rates go back up at the end of the initial period. That should happen about 5 years after this silliness starts, so... 2005?

We got a 20 year fixed rate mortgage when we bought the house, refinanced when interest rates dropped, did it again to a 15 year mortgage. Thus ends my financial wisdom. And I admit that I was quite lucky to be looking for a house just before a housing market boom started and at a time of historically low interest rates. It was not luck, but rather hard work and good financial habits, that meant that I could put in a huge down payment.

Many thanks to my father for teaching me, largely through example.

Comments

[metahacker.livejournal.com]

I would say you're right on target. It's not like the curtain drops right at 5 years; that's the time people *start* to have trouble. It took a while for the momentum to build, as people scrambled to cover their newly ridiculous mortgages, and now it's becoming such a real problem that even the newspapers are noticing.

From a personal perspective, though, it's a little annoying...I planned on buying *next* year, or the year after that, not this year, and I'm afraid something will have happened to the market between then and now. Otherwise we'd look at that place next to you. ;) But whatever happens the interest rates are likely to be rather unfavorable, because of the stupidity of others. Ah, well -- at least the houses will be cheaper.

[elizabear.livejournal.com]

There's another one on the market, 115 TPR, a few houses down from us. It's a little cheaper. :) ($515 vs $550)

This row of houses is a group of 7; two are on the market right now, and one was sold about 4 months ago. It seems weird that so many are turning over right now, but in general these are either the original owners from when the houses were built (1970) or other older people (like my neighbors) who are downsizing.

[cvirtue.livejournal.com]

I've read some of the articles -- there were a lot of foolish people out there, and some were also misled by the people who should have been helping them. Plus the relaxed rules for how much one can "afford" to borrow. A true mess.

[sareena99.livejournal.com]

hmm... and your mother was chopped liver?
...snifff...

[http://users.livejournal.com/merle_/]

The whole ARM thing sounded like a scam to me. The only way it would make sense is either if you plan on moving or refinancing before the "adjustible" part kicks in.

I was looking a few years back. People kept pushing the ARMs, and the loan managers kept saying "you have great credit, you could afford a much more expensive house than the range you're looking in!". Erm -- thanks, but no thanks. Anything that requires more than $2k/mo over my current rent is way past my comfort zone.

And you're probably still on target. It takes a couple of late payments and back-and-forths before the repo man comes knocking.