4 ms·

Roughly 1 in 3 american households are behind on their housing payments. Most states (and all federally backed mortgages) have temporarily suspended evictions

by paulmd 6y ago

Roughly 1 in 3 american households are behind on their housing payments. Most states (and all federally backed mortgages) have temporarily suspended evictions so the short answer is that people in financial distress dropped that expense, which is usually the single largest on most people's budgets (for low-income people this can often be 50% or more of take-home depending on the city - yes, the rule of thumb is that it shouldn't be higher than 25% but you simply can't find affordable housing in a lot of areas). However that one eventually is going to come due because the federal mortgage eviction moratorium doesn't prevent you from going in default on your mortgage, it only prevents evictions. The 3-month timer is still running and as soon as the moratorium on evictions is lifted, they can kick you out immediately. So as soon as that lets up in a month or two there's going to be a massive surge in evictions in states that do not go out of their way to keep evictions suspended. (and in fact this is probably a snowballing problem, the longer this crisis goes unchecked and the worse the economic pain gets, the more people that will be in default and the bigger the difficulty of getting "back to normal". Furthermore at some point that shit starts rolling back uphill economically, banks turned your mortgage into financial products and you not paying is cutting off the income of someone else, and in fact there is an eventual risk of a 2008-style crisis occurring on top of all the current problems if we get into a situation where people are defaulting en-masse.)

_wldu 6y ago
Almost 40% of homes in America are owned free and clear (no mortgage). https://www.forbes.com/sites/brendarichardson/2019/07/26/nearly-40-of-homes-in-the-us-are-free-and-clear-of-a-mortgage/#1ff0b48947c2 https://www.forbes.com/sites/brendarichardson/2019/07/26/nea...
- dopamean 6y ago
  I wonder how many of those are occupied by renters.
  - _wldu 6y ago
    I'm not sure. I posted that to point out the danger of these statistics. We have to be careful. People can tell whatever kind of story they want to tell (at either extreme) and cite the same statistics. Mark Twain made this quip widely known, and it is relevant: "Lies. Damned Lies. And statistics"
    - blaser-waffle 6y ago
      Benjamin Disraeli made it famous; he said it first. Mark Twain made it famous with Americans.
      - thesteamboat 6y ago
        This is probably wrong. Quoting from the wikipedia article on this phrase: > The phrase derives from the full sentence, "There are three kinds of lies: lies, damned lies, and statistics."; > it was popularized in the United States by Mark Twain and others, who mistakenly attributed it to the British prime > minister Benjamin Disraeli. The phrase is not found in any of Disraeli's works and the earliest known appearances were > years after his death. The phrase was attributed to an anonymous writer in mid-1891 and later that year to Sir > Charles Dilke, but several others have been listed as originators of the quote, including frequent erroneous > attribution to Twain himself. https://en.wikipedia.org/wiki/Lies%2C_damned_lies%2C_and_statistics https://en.wikipedia.org/wiki/Lies%2C_damned_lies%2C_and_sta...
      - singlow 6y ago
        If Disraeli made it famous, why doesn't anyone have any idea when or where he said it? When Twain first used it, he indicated that it was a phrase attributed to Disraeli by some, but in a way that made it sound like Twain knew that not to be true. There is no evidence Disraeli ever said it and its first appearance in history is after Disraeli's death.
- mjayhn 6y ago
  I'm not sure what you're trying to really portend here but this is a huge, huge part of that article considering it's almost the entirety of the current working class parents; Sixty-eight percent of adults 70 and older are mortgage-free, while 15.9% of Millennials are free and clear of mortgage payments. I'm in my mid-30s and I hardly have any friends that own houses and if they do they're tech workers with decades left on their loans.
  - kevin_thibedeau 6y ago
    Purchasing homes in low CoL areas is much easier.
    - mjayhn 6y ago
      I started my career in 2008. Millennials had to go where the jobs where, and they weren't in low COL areas. Hopefully covid opens up the market for far more remote work. I'm remote now, finally, but in a high COL area, which feels especially dumb now that I'm locked inside.
- paulmd 6y ago
  >Almost 40% of homes in America are owned free and clear (no mortgage). looking merely at owned homes is ignoring everybody that rents. Renters falling behind on their rent are equally likely to be evicted as soon as the moratoriums are listed. (and that in fact goes to my point about "your rent/mortgage is someone else's asset", a renter who's not making mortgage payments is probably still putting someone else's mortgage in the red and causing havoc in the rest of the financial system. I don't personally shed too much of a tier for the personal finances of highly overleveraged landlords doing the BRRRR type bullshit, it's been screwing up pricing for renters for a decade now, but it's a problem for the rest of the financial system too.) BRRRR: https://investfourmore.com/brrrr-method/ https://investfourmore.com/brrrr-method/ Also, as another poster mentioned, the demographics of home ownership tilt very differently. Lots of boomers own their homes, in many cases free and clear. The numbers for people in their 30s (let alone 20s) are pretty low these days, so your statistic basically ignores everyone under 50. (And in fact even if we got younger people into homes, the same wealth transfer that boomers enjoyed probably cannot be replicated - it was artificially created by lowering interest rates from the highs of 19% in the 70s/80s down to basically 0% now, allowing people to finance much larger amounts of money and causing the underlying asset values to soar. Nor would it be desirable to do so.) And in general I disagree with your comment further down in the thread about "you can say anything with statistics". The obvious thrust of that argument is: gee, I guess we better just not use statistics and argue about feelings instead. That's so much better. It's pretty much an argument made by people whose positions can't be justified by actual data - they don't reconsider their positions, they just want to stop looking at the data.
  - _wldu 6y ago
    The point is that many statistics are worse than 'damned lies' because they are made-up to prove a point. It's like a tobacco company paying for research that shows nicotine is not addictive in 66% of people tested. I just made that up as an example. It's not true. So before you can have any faith in stats, you have to know the source and how the research was funded and by whom (this is before we even begin to talk about methodology flaws). If you do not know that then you cannot trust the stats at all. They are indeed worse than damned lies.
felideon 6y ago
> The 3-month timer is still running and as soon as the moratorium on evictions is lifted, they can kick you out immediately. Homeowners shouldn't rely on the moratorium. They should have contacted their lender to get on a 3-month forbearance plan which can be extended for another 3 months when it expires. I'm not sure how many times lenders are going to permit forbearance extensions, but once people are able to get back to work and start making mortgage payments, they need to call their lender for a loan modification. This brings their account back to current.
charwalker 6y ago
I work within a financial institution (CU) and I can say they have no wish to actually evict/foreclose/etc. After the 2008 crash they bumped their reserve % 3-5 points higher than required to insulate from the next recession (here today). But for mortgages, internal notices appear to suggest it's better for the CU if they keep people in their homes and have the same level of payments resume in a few months vs auction the house. Maybe the math only works out for a few months, I'm not in the loop on those conversations. They are very community focused and not driven by profit so that helps me trust the internal news. As someone wanting a home in a high CoL area, I would love a 10-20% off rush from thousands of houses going to auction or sale but it wold be devastating locally. We simply are not equipped, as a nation, to address the fallout from this years events. Especially not with current (lack of) leadership and circling of wagons.
- paulmd 6y ago
  I think local credit unions are a bit different than banks. I don't think JP Morgan or whatever would probably give that same consideration. But I do take your point that banks don't necessarily want to immediately boot everybody out, foreclose, and crash the market at a time when potentially not a lot of people are buying. Do bear in mind that the Fed has injected a shit-ton of cash into the market right now, and there actually would be more buyers than you think - it's just that they would be rental companies looking for more assets to snap up at firesale prices.

by paulmd 6y ago

_wldu 6y ago

Almost 40% of homes in America are owned free and clear (no mortgage). https://www.forbes.com/sites/brendarichardson/2019/07/26/nearly-40-of-homes-in-the-us-are-free-and-clear-of-a-mortgage/#1ff0b48947c2 https://www.forbes.com/sites/brendarichardson/2019/07/26/nea...

dopamean 6y ago
I wonder how many of those are occupied by renters.
- _wldu 6y ago
  I'm not sure. I posted that to point out the danger of these statistics. We have to be careful. People can tell whatever kind of story they want to tell (at either extreme) and cite the same statistics. Mark Twain made this quip widely known, and it is relevant: "Lies. Damned Lies. And statistics"
  - blaser-waffle 6y ago
    Benjamin Disraeli made it famous; he said it first. Mark Twain made it famous with Americans.
    - thesteamboat 6y ago
      This is probably wrong. Quoting from the wikipedia article on this phrase: > The phrase derives from the full sentence, "There are three kinds of lies: lies, damned lies, and statistics."; > it was popularized in the United States by Mark Twain and others, who mistakenly attributed it to the British prime > minister Benjamin Disraeli. The phrase is not found in any of Disraeli's works and the earliest known appearances were > years after his death. The phrase was attributed to an anonymous writer in mid-1891 and later that year to Sir > Charles Dilke, but several others have been listed as originators of the quote, including frequent erroneous > attribution to Twain himself. https://en.wikipedia.org/wiki/Lies%2C_damned_lies%2C_and_statistics https://en.wikipedia.org/wiki/Lies%2C_damned_lies%2C_and_sta...
    - singlow 6y ago
      If Disraeli made it famous, why doesn't anyone have any idea when or where he said it? When Twain first used it, he indicated that it was a phrase attributed to Disraeli by some, but in a way that made it sound like Twain knew that not to be true. There is no evidence Disraeli ever said it and its first appearance in history is after Disraeli's death.
mjayhn 6y ago
I'm not sure what you're trying to really portend here but this is a huge, huge part of that article considering it's almost the entirety of the current working class parents; Sixty-eight percent of adults 70 and older are mortgage-free, while 15.9% of Millennials are free and clear of mortgage payments. I'm in my mid-30s and I hardly have any friends that own houses and if they do they're tech workers with decades left on their loans.
- kevin_thibedeau 6y ago
  Purchasing homes in low CoL areas is much easier.
  - mjayhn 6y ago
    I started my career in 2008. Millennials had to go where the jobs where, and they weren't in low COL areas. Hopefully covid opens up the market for far more remote work. I'm remote now, finally, but in a high COL area, which feels especially dumb now that I'm locked inside.
paulmd 6y ago
>Almost 40% of homes in America are owned free and clear (no mortgage). looking merely at owned homes is ignoring everybody that rents. Renters falling behind on their rent are equally likely to be evicted as soon as the moratoriums are listed. (and that in fact goes to my point about "your rent/mortgage is someone else's asset", a renter who's not making mortgage payments is probably still putting someone else's mortgage in the red and causing havoc in the rest of the financial system. I don't personally shed too much of a tier for the personal finances of highly overleveraged landlords doing the BRRRR type bullshit, it's been screwing up pricing for renters for a decade now, but it's a problem for the rest of the financial system too.) BRRRR: https://investfourmore.com/brrrr-method/ https://investfourmore.com/brrrr-method/ Also, as another poster mentioned, the demographics of home ownership tilt very differently. Lots of boomers own their homes, in many cases free and clear. The numbers for people in their 30s (let alone 20s) are pretty low these days, so your statistic basically ignores everyone under 50. (And in fact even if we got younger people into homes, the same wealth transfer that boomers enjoyed probably cannot be replicated - it was artificially created by lowering interest rates from the highs of 19% in the 70s/80s down to basically 0% now, allowing people to finance much larger amounts of money and causing the underlying asset values to soar. Nor would it be desirable to do so.) And in general I disagree with your comment further down in the thread about "you can say anything with statistics". The obvious thrust of that argument is: gee, I guess we better just not use statistics and argue about feelings instead. That's so much better. It's pretty much an argument made by people whose positions can't be justified by actual data - they don't reconsider their positions, they just want to stop looking at the data.
- _wldu 6y ago
  The point is that many statistics are worse than 'damned lies' because they are made-up to prove a point. It's like a tobacco company paying for research that shows nicotine is not addictive in 66% of people tested. I just made that up as an example. It's not true. So before you can have any faith in stats, you have to know the source and how the research was funded and by whom (this is before we even begin to talk about methodology flaws). If you do not know that then you cannot trust the stats at all. They are indeed worse than damned lies.

felideon 6y ago

> The 3-month timer is still running and as soon as the moratorium on evictions is lifted, they can kick you out immediately. Homeowners shouldn't rely on the moratorium. They should have contacted their lender to get on a 3-month forbearance plan which can be extended for another 3 months when it expires. I'm not sure how many times lenders are going to permit forbearance extensions, but once people are able to get back to work and start making mortgage payments, they need to call their lender for a loan modification. This brings their account back to current.

charwalker 6y ago

I work within a financial institution (CU) and I can say they have no wish to actually evict/foreclose/etc. After the 2008 crash they bumped their reserve % 3-5 points higher than required to insulate from the next recession (here today). But for mortgages, internal notices appear to suggest it's better for the CU if they keep people in their homes and have the same level of payments resume in a few months vs auction the house. Maybe the math only works out for a few months, I'm not in the loop on those conversations. They are very community focused and not driven by profit so that helps me trust the internal news. As someone wanting a home in a high CoL area, I would love a 10-20% off rush from thousands of houses going to auction or sale but it wold be devastating locally. We simply are not equipped, as a nation, to address the fallout from this years events. Especially not with current (lack of) leadership and circling of wagons.

paulmd 6y ago
I think local credit unions are a bit different than banks. I don't think JP Morgan or whatever would probably give that same consideration. But I do take your point that banks don't necessarily want to immediately boot everybody out, foreclose, and crash the market at a time when potentially not a lot of people are buying. Do bear in mind that the Fed has injected a shit-ton of cash into the market right now, and there actually would be more buyers than you think - it's just that they would be rental companies looking for more assets to snap up at firesale prices.