Category — Real Estate

Due to layoffs, creditworthy and conservative borrowers simply can’t afford their mortgage payments. Moody’s macro website, Economy.com, predicts 60% of all mortgage defaults this year will be caused primarily by unemployment - up from 29% last year.

Economists are referring to this next round of foreclosures as the “third wave,” different from the first round, when speculators dumped property because of plunging prices, and the second wave, when subprime borrowers’ introductory interest rates reset. The “third wave” consists of your neighboor who lost his job and after sending out about 2,000 resume’s, can’t even get a single job interview.

What a horrible feeling that must be. Where do you turn? Who needs or wants you? Yet, there are over 3 million jobs going without someone to fill them. There is an actual shortage of qualified workers in the fields of accounting, and healthcare. The factory jobs have gone overseas.

Two houses down from me sits a lovely 2-story home. It has been empty for over a year. The single mom who owned it, lost her job and left in the middle of the night. Since then there has been water damage. Water damage in Central Texas soon turns into a major mold problem. The house may have to be gutted before it can be sold. Sad!

Even though it could damage his bid for Mayor of Detroit, City Councilman Kwame Kenyatta and his wife packed up their belongings, locked the doors, mailed in the keys, and walked away — adding another vacant house to the thousands in a city hard hit by the nation’s mortgage crisis.

“We’re already underwater when it comes to what we’re paying on the house versus what the house is worth,” Kenyatta said.

“You don’t show leadership by walking away from your home in the city of Detroit. You have vandalism where they find out the houses are vacant. You have people stealing fireplaces,” said one of his neighbors.

Kenyatta, a Democrat, is not the only elected official facing mortgage trouble. The Wayne County prosecutor’s Detroit home has gone into foreclosure. And California Rep. Laura Richardson nearly lost her home before she paid up delinquent home loans.

Walking away from a mortgage isn’t illegal; the bank takes possession and tries to sell the house. But “it just puts more properties in foreclosures, and that’s the last thing we need right now. That’s just pulling the median sales price down,” said Karen Kage, who runs a real estate listing service in suburban Detroit.