Wednesday, May 23, 2012

Two Surprises Might Be Two Too Many

Intriguing doesn't begin to cover it.  Twice in two days we've seen the campaign topic du jour--student loan debt--tied to the housing crisis.  But in two very different ways.

The New York Times ran part one in their series "Degrees of Debt" that detailed how an entire generation is losing out on life, marriage, children, etc. because of the cost of college and the debt they've assumed.  This quote from the article caught our eye:

“If one is not thinking about where this is headed over the next two or three years, you are just completely missing the warning signs,” said Rajeev V. Date, deputy director of the Consumer Financial Protection Bureau, the federal watchdog created after the financial crisis.
Mr. Date likened excessive student borrowing to risky mortgages. And as with the housing bubble before the economic collapse, the extraordinary growth in student loans has caught many by surprise. But its roots are in fact deep, and the cast of contributing characters — including college marketing officers, state lawmakers wielding a budget ax and wide-eyed students and families — has been enabled by a basic economic dynamic: an insatiable demand for a college education, at almost any price, and plenty of easy-to-secure loans, primarily from the federal government.
Then, here comes the reference again, but in a different context.  American Public Media's "Marketplace" cites the trend before the housing crisis for low-and middle-income families to use their home equity for (wait for it...) college education costs for their children.  But they chose, with this extra money, to send their children to more expense, selective schools than they otherwise would have.

We here at MortgageKeeper can't help but wonder...is it possible that some families were ensnared by both crises--first using housing equity that's now gone to fund college, and then finding college too expensive, and assuming out of sight loans to pay for the rest?

Tuesday, May 15, 2012

Foreclosures Increase in Top 100 US Metros

Sometimes it's hard not to judge the world by what you see around you.  Case in point:  in Minneapolis, where a few of us MortgageKeeper folks live, the economy seems to be improving--considerably.  Homes that have had "for sale" signs in the yard for two or even three winters are now boasting shiny new "SOLD" hangers. More and more "help wanted" signs are finding their way into shop windows.  Things seem to be moving along.

But new findings show that the nation's 100 largest metros are suffering from more foreclosures--not fewer.  Judicial back-up, temporary delays, and--yes--the economy, are all blamed.

We are pleased the MortgageKeeper is keeping pace with the needs of metros across the United States.  Our data team recently added local, vetted referrals for Bakersfield, Stockton, and Santa Ana, California; Colorado Springs, Colorado; and Tulsa, Oklahoma.  Here's hoping that our help won't be needed...but we are there if needs arise.

Monday, May 7, 2012

Why Bailouts Fail

For the most part, MortgageKeeper folks are "glass is half-full" types.  But a recent rather "glass is half empty" commentary by Neel Kashkari, head of global equities for Pimco and a former assistant Treasury secretary who ran the Troubled Assets Relief Program (TARP) until 2009, turned our heads.

Mr. Kashkari maintains that homeowners are losing their homes to foreclosure usually because they own more house than they can afford, or because they are out of work.  The latter idea supports what our MortgageKeeper Homeowner Status Report is telling us every quarter--more folks look to MortgageKeeper applications for job referrals than for virtually any other category.  While this may not be completely surprising in a down economy, the fact that Mr. Kashkari distilled the foreclosure problem down to "too much house + unemployment + too little savings" was an interesting take.

We wish Mr. Kashkari had mentioned that help with everyday bills and expenses--both beyond the scope of federal foreclosure programs--is much needed as well.  MortgageKeeper's applications work hard every day to fill in these gaps.

Check out Mr. Kashkari's article, and let us know what you think.