That's an absolutely staggering statistic!

Minsky, that's why I think it's short-sighted for people to blame the people who are going under foreclosure. It's much more than just people being irresponsible, but of course commenters here tend to forget that.

(to clarify: blaming JUST the people who are going under foreclosure; of course there are those who just make horrible decisions.)

The part that baffles me is that where I'm living now, rentals are perfectly affordable, but despite this crisis there are still a ton of little tiny houses, like two bedrooms each, on little tiny lots, all of them 20+ years old, all still selling for over $100k. Meanwhile, I'm renting a two-bedroom apartment with nearly the same square footage, and no maintenance costs, and free internet, for the same amount an *optimistic* mortgage on that house would run me. (I.e., realtor.com's assumption of 20% down and a far better rate than I'm sure I could really qualify for.)

Something about this market is still broken. It's no wonder people are still defaulting if even when the market is this low, I still couldn't buy a house in this city that I could actually afford, even though I have no trouble paying my rent and have better work than a lot of people do right now.

That does it. I'm officially loading up on food, booze, and ammo.

As a conservative American, my views on this probably aren't welcome.

If people still got 40 acres and a mule for military service, this would have never happened.

Change isnt always good.

@spoco: Then why bring it up?

I just want to know how I can make this benefit ME.

It's a good thing that Congress understands the needs of the poor struggling American and is taking swift action to prevent further depreciation of our job base and economical outlook.........Just kidding, they are voting themselves a pay raise...

[gatewaypundit.blogspot.com]

That means 7 of 8 are not in foreclosure or past due.

This is completely foreseeable. Why? Virtually all of the government proposed or sponsored programs require the borrower to be at least 60 days delinquent.

Current on your mortgage but taking money from savings of a second job to pay it? Tough luck. We cant help you.

Quit paying for a couple of months? Hi. I'm from the government and I'm here to help (oh yeah, and to get some more, er, revenue from your neighbor).

It's called a moral hazard and the Government has created it in spades.

most impressive...

I can't point fingers anymore. Too many people and situations came into play for our "house of cards" to fall. Some people say this downfall began in the 80's, 90's, some say when Bush hit the office. WHO CARES. It's a done deal, our country is in ruins.

RUINS, I SAY!!

*tear*

Any chance of forcibly tattooing "1 of 8" onto the foreheads of those smug economist types who blithely told us twelve months ago that the sub-prime crisis was nothing to worry about since it would be self-contained?
I've got the ink, if someone else has a dull, rusty needle.

I can't help but hear the announcer voice from Mortal Kombat games, saying,
"IMPRESSIVE..."

@spoco: I am confident that a layoff will change your view.

@kwsventures - The glass is half full/half empty thing only makes sense if the contents of the glass are relatively unimportant.

I'm curious to find out their exact definition of houses in the foreclosure process. This probably doesn't account for those already taken over by the bank, refused by the bank (like in Cleveland, where the bank doesn't even want them), or just sitting vacant with no owner to be found. This 1/8 might be a statistic of the acceleration of the problem.

@Trai_Dep: There were plenty of economist types who disagreed with the idea that sub-prime crisis was nothing to worry about.

Peter Schiff called it perfectly-

@Nakko (reply seems broken today) FATALITY. Recession wins! Flawless victory!

@Borax-Johnson: Moral hazard doesn't always work the way people think it works. For example, people with fire insurance tend to have FEWER fires, despite being fully indemnified against fire and bearing none of the risk of fire. Moral hazard tells us that people with fire insurance should have MORE fires -- substantially more fires -- because they bear no risk, but it turns out if you're uptight enough to have fire insurance, you're careful about fire.

Sometimes removal of risk is about being RESPONSIBLE and trying to create as low-risk an environment for oneself as possible.

I'm getting very tired of the Boy Who Cried Moral Hazard as a) nobody ever shows any understanding of the complexity of moral hazard issues when citing it and b) there's a HELL of a lot of moral hazard that GOT us here through deregulation and systems of perverse incentives, but THAT was okay because it was just the free market at work. Now that individuals are suffering from the environment created by those corporate interests, NOW everyone's bitching about creating moral hazards.

@minsky: It's also misstated in this headline. It's not 1 in 8 households, it's 1 in 8 mortgage holders/homeowners. So it's more like 1 in 12 households.

@Roy Hobbs: We just loaded up (no pun intended) on .38 special ammo. Not because "Obama is gunna take my gunz", but because there may be an impending implosion of basic services. And those with guns will win in Mad-Max land!

@spoco: Your views involve destroying America because "it's not fair to give money to people who didn't earn it."

Guess what? It's WAY to late for that line of reasoning. Swallow your pride and save America.

@floraposte: Aaaand it looks like Reuters' math is questionable too. It's 11.18%--that's 1 in 9, not 1 in 8. So it's more like 1 in 13 or 14 households.

Chase gets my $1200 a month and they can't touch me. >:)

I, like many, didn't get a stupid mortgage that I couldn't pay. I don't have to beg for assitance. Those that are caught up in all of this deserve to be evicited so they learn that there are concequences to their idiotic decisions.

Come on now... I too have a $1000 fixed (at 5.5%) mortgage-- but if my wife or I lost either of our jobs, we'd be in trouble.

@nakedscience: You really don't think that one in eight people are irresponsible???

Nope, I don't strathmeyer. The majority of those people were probably provided misinformation or were pressured to make a purchase they could not afford. I'm sure there are plenty of people who made mistakes, but it's not all their fault -- the lenders, banks, etc., made just as many (IF NOT MORE) mistakes.

A nation of whiners and "what's in it for me" citizens. Bleh. What would grandpa think if he were still alive?

@ Trai and Todd - Oh yeah, Peter Schiff did call it right. And by only ever calling on him to be harassed on TV, it made him look like a lone crazy man.

Forget tattooing, I want a blackjack with that embossed on it. Whenever I meet a mortgage broker, half-assed cheerleader economist or bond insurer I can just wack em in the head and leave the mark. Hell, add failed CEO, banker or any number of other contributing morons.

The positive side effect would be that they all have hideously boring jobs that they used to brag about. No more listening to that.

And also, strathmeyer, people are losing their jobs left and right, jobs that were probably stable before the recession. Like JGKojack, they can afford the mortgage now...but would be screwed if they were let go. And that is pretty common, and I wouldn't be surprised if a lot of the 1 in 8 people lost their jobs and are now left dangling.

I think people in this country rely way too much on owning a home. It's like they think it will make them a better person. What's so wrong with renting? At least I'll never be left homeless. Plus I'm single, so it just makes sense. Maybe one day if I'm partnered up, but right now I like the fact that my management takes care of any problems I have (I don't have to pay for the broken a/c!), and it's easy for me to move at will, especially since my future with the company I am with now may not be permanent.

Anyway, long comment is long!

@Eyebrows McGee: Total agreement. It's a theorized effect that sometimes operates and sometimes doesn't, and it tends, I think, to be a sophisticated sounding way of resenting aid for which one isn't eligible. (Not that I don't get the wanting money thing myself--just that it doesn't translate into a faulty economic decision on the part of of the government not to give it to me.)

I find this really hard to beleive. I don't know anyone who has lost their job or is in foreclosure, or at risk for foreclosure, and I know a few more than 8 people...

Yes, Jenkinsbball , because everyone defaulting has obviously made bad decisions and of course no one is getting laid off in droves ... nope, it's all their fault, they are all stupid...

Sigh. This is what I'm talking about. The lenders and bankes, etc., have made JUST AS MANY IF NOT MORE mistakes.

I got a delinquint tax notice from the County, which puzzled me since Chase is supposed to pay property taxes. Well-- turns out, after talking to a lot of idiots at Chase, that Chase had been paying taxes on the wrong property (type-o in their computer system).

I got it fixed eventually- but here I was a delinquint taxpayer and there was NOTHING I could do to change that until I received notice.

@floraposte:

I suppose more sensational (and accurate) would be to say that at least 1, maybe 2 houses on your city block are either foreclosed or going to end up foreclosed.

@Borax-Johnson:

I'd suggest in this case it's closer to a perverse incentive than a moral hazard. The money is intended to help keep people financially afloat in their house, but the method of distribution gives people who are already afloat an incentive not to be.

@ConroyCotta: Personal experience doesn't reflect averages, though. I'm guessing, for instance, that you're not in California, Florida, or Arizona, or Ohio or Michigan, so the rate of people affected will be considerably lower in your area, while people in those areas may well know a considerably higher number of people affected.

You might find it interesting, though, to pop in your zip code at a foreclosure listing like realtytrac.com and see how many homes they have that you didn't realize were in foreclosure.

Yeah, how many homes in the US have mortgages?

@shepd: Theoretically, I can see that, but I suspect that the people who currently aren't in housing trouble aren't individuals likely to be enticed into it by such a comparatively modest incentive.

@Onion_Volcano: My grandpa, the stockbroker who worked through the Depression, would be spitting tacks at the regulators and the institutions that exponentially expanded crap loans into a financial cornerstone.

@SadSam: Figures I found varied, but it was mostly around 70% (obviously the rest are mostly renting rather than paid off).

What's wrong with having forclosures? Owning a home is not a RIGHT. I waited until my mid thirties before I could afford a home and now I am asked to pay for those that couldn't wait. There's going to be a painful readjustment to get things back on track. Not everyone can win; that's just the way it is.

I find the 1 in 8 statistic truly shocking.

@Nakko: Some of the people here seem to be wishing for him to say "FINISH HIM!"

@strathmeyer: How can you call people irresponsible who lost their jobs through no fault of their own. They can't find new jobs because no one is hiring and they can't afford their mortgages because their income was cut in half. They can't sell their homes because no one is buying, a buyer can't get financing, or their home is worth less than they owe. Please explain to me how those people are irresponsible?

I agree that there are some instances of predatory lending out there (sad stories recently highlighted on the Consumerist come to mind) but my guess is that a vast majority of these foreclosures have some amount of greed involved. People bought more house than they could afford and now its caught up with them.

The problem with all of these bailouts and such is that it is teaching generations that there are not consequences for stupid actions. Hell, we have little leagues here that don't have winners and losers because someone might get their feelings hurt. School districts are dropping traditional grading methods so that kids don't fail. Now we as taxpayers are bailing out companies that have made horrible decisions, and homeowners that were greedy and took out more than they knew they could handle.

Guess what, America - there are failures in life. I've failed numerous times. The difference is that I have used my failures as learning opportunities rather than kicking back and expecting my bailout.

Let these foreclosures happen. It will make most of the "victims" better in the end. Let these companies fail, it will create a new breed of businessperson that is focused on doing things different. Since we've bailed them out, it is only fair to expect more of the same. And now we are creating an additional generation that is learning that they can get something for nothing.

We could have also called this article, "7 of 8 Homeowners current in Mortgage Payments". The 88% of us he never missed a payment, bought houses we could afford and didn't want a status symbol to live in will pay for the 12% that broke the rules.

Admittedly, in that 12% there are some who ended up there through no fault of their own. Still, some of us believe that we should bear the consequences of our choices and not wait to be rescued by a welfare program.