There seems to be, ironically, some protections in poverty--some of the poorest states (Mississippi, West Virginia) have some of the lowest foreclosure rates.

Are you saying we are being lied to by someone? Please do tell.

Oh, that second graphic is predicting another wave of really nasty shit, isn't it?

Though, on a different note, Realtytrac only started recording since 2005. It isn't like its going back 50 years and saying THIS IS THE WORST EVAR. I love it when they report on the stock market and they say "It's the lowest its been in 6 MONTHS OMG ITS THE END OF THE WORLD". Srsly. 6 months is nothing. Come back to me when its been a decade or more.

@Oranges w/ Cheese wants it to be winter already: Yes.

@Oranges w/ Cheese wants it to be winter already:

Sure looks like it. Unless we (the system) tries to do something proactive about it, and soon.

@Ben Popken: Dammit. I guess its a good thing that I got laid off this year and its scrubbed my plans to buy a house.

@Oranges w/ Cheese wants it to be winter already: That depends on the general economy and interest rates. Alt-A's are not-quite-prime, so those people should be, in general, a little more financially stable than the subprimers. If interest rates rise though, then the option adjustables could all fall down.

While I would like to only leave a witty comment (i.e, I didn't know there were 1,554 houses in Rhode Island altogether), this is serious stuff. And I worry it's not going to get better anytime soon, as...
Industries that created jobs that helped us out of previous recessions are either gone altogether or greatly reduced from before (e.g., construction & manufacturing).
Banks have graciously accepted my tax dollars to bail themselves out and are thanking me by raising fees and rates.
I've also looked into buying a house, but there is still too much uncertainty in the economy for me.

@Oranges w/ Cheese wants it to be winter already: Yes, but for the reasons you think. Subprimes are aren't all the foreclosures, or even a vast majority. I'm trying to find it, but I think they're only a slight majority of the foreclosures. That may change as the economy continues to lag. But yes, those prime rate readjustments could spell trouble, even for "prime" customers because they could already be stretched thin.

Let's hear it for Vermont!

Here's an interesting article from Business Week 2006 warning about Option ARM loans: [www.businessweek.com]

I'm not clear on the difference, though, between vanilla "subprime" and the option-ARMs. Were the subprimes not ARMs?

What is Vermont doing that makes it such an anomaly?

@floraposte: I'm being totally serious here when I ask this: Do trailer homes have mortgages? I'm not talking about campers and RVs, I'm talking about the ones that kind of actually look like real homes but have no foundations so they have to be raised off the ground. Mississippi and West Virginia are two areas in which a signifiant population of residents live in trailer homes. I figure those are cheaper than regular homes in that area anyway, so maybe residents don't have as hard of a time paying for them? Or they don't have mortgages?

@floraposte: The figures are third quarter 2009. I'm thinking the least wealthly homeowners were gone last year

@ARP: Yes, I'd like more information about the correlation between resets and foreclosures in each flavor of loan.

"There seems to be, ironically, some protections in poverty--some of the poorest states (Mississippi, West Virginia) have some of the lowest foreclosure rates."

I can't say about Mississippi, but WV had very little exposure to the housing boom because most of it is so dirt poor. What foreclosures we've had are in the far eastern panhandle and around Charleston and Wheeling.

@j-o-h-n: Though here's a piece that suggest Option ARMS actually have higher foreclosure rates than subprimes: [www.calculatedriskblog.com]

@floraposte: Subprimes are mortgages given to lenders who would not normally qualify, and therefore pay a higher interest rates. There are agencies and credit unions that have been writing subprime mortgages for YEARS that are not in trouble because they were not reckless with their lending. They required down payments and/or PMI, set fixed rates, verified employment, etc. Subprime simply means you are part of a riskier pool of borrowers, and the lender increases the rates to account for the likelihood there will be more foreclosures than in the pool of "prime" borrowers.

So, that's a long answer, but subprimes are not necessarily ARM's, and ARM's are not necessarily subprimes.

@FatLynn: Good question, I thought, so I searched and found an answer: [online.wsj.com]

In short, state lending laws.

@FatLynn: It isn't such a high growth area. If you look at some of the states with the highest numbers, California, Florida, and Arizona - they were in boom boom boom time. As a resident of Florida, I can't tell you how many apartment complexes I saw bought up and turned into "condos to own" that have since crapped out and gone back to renting. And how many additional "townhome" communities were started that now lay half built.
Seriously, it was really stupid stuff they were doing.
There was a piece on NPR yesterday about Phoenix having over 500 new building permits each month in the boom time but now they're lucky to get 50.

@FatLynn:

Low population and a high median income (read: people have more money) and less than 6000 houses were sold there in 2008.

Interestingly enough, Vermont also has the lowest credit card deliquency rate in the nation.

@FatLynn: So how are they deciding which category you're in if your mortgage was both? Or is the key the "Option" part of "Option-ARM"?

@pecan 3.14159265: When we purchased our house five years ago (in Missouri), we looked at some "modular homes" and trailers as a possible way to get a larger piece of land with a place to live while we built a house. My hopes were dashed when I found out that banks generally did not lend for trailers or modular homes that were not on a slab/basement foundation. In some cases, you can get owner financing, but it is my understanding that banks won't ante up for anything not permanently attached to the ground.
That said, this was just my experience, and may not be the case everywhere. Anecdotal evidence FTW!

@hi: I'm being serious. The article says: "What recovery?", who stated their was a recovery?

@hi: there*

@wgrune: The reason fewer than 6000 houses were sold is that Vermont is really tight on their lending laws, so that people who could afford houses in other states couldn't there. It hurt its growth, in fact. But now they're seeing an advantage.

I wonder if neighboring states have higher foreclosure rates near the Vermont boundary from people who couldn't buy a house in Vermont but work there.

@Urgleglurk: That's what I was wondering, and it seems to have been what helped Vermont. So the less boom you had, the less fall you're suffering. Makes sense, I suppose.

@floraposte:

So you're saying if all states had tighter lending laws and didn't give out mortgages to anyone we might not be in this mess? :-)

@floraposte: Oh, and thanks for the info as well.

@TheHans: couldn't you get a mortgage for the land itself, though?

Everything looks better in Helvetica.

We may be hearing this every quarter until sometime in 2012, with some minor variations of course. We are in the eye of the hurricane with toxic mortgage resets.

See chart: [www.thetruthaboutmortgage.com]

The next round of alt-a and option arms look to be much worse than the subprime we just went through.

That garbage about home sales up nine something percent is NAR spin. Most of those sales were for houses under $200k. With the govt. $8000 tax credit and 3.5% down FHA loan means people still bought with no money down (using the $8000 credit). I can only imagine many of these will get notice of defaults too.

@nnj:

From your link:

"What's more frightening is that a recent poll indicated that most borrowers didn't even realize their mortgages could/would reset, or what exactly it all meant."

That is frightening, and shows the ignorance of these people.

@pecan 3.14159265: Do you mean the ones that are semi-permanent? As in, you usually have to hire a contractor to secure them to a location, and hire a truck to move them for you if you do decide to move? Those ones do typically have a mortgage, and sometimes the person will purchase the land that they are on as well and include that in the mortgage. (I have a few family members that own them, some of them can be nicer than regular homes but cost much less even including the land.)

@floraposte: An Option ARM loan allowed the home buyer the "option" of making a minimum payment each month which was *lower* than the monthly interest charge, in which case the unpaid interest would be added to the principal due.

In other words, pure evil.

@floraposte: I would assume they put you in the riskier category for the sake of the graphic, but I don't really know.

BTW, I think it is very important for people to understand that subprime loaning is not inherently bad, because it will affect the ability of underserviced groups to get loans in the future.

@wgrune: Crazy, but it just might have worked!

The article's got some really interesting details--Vermont, for instance, established that lenders have a responsibility to their borrowers, so a default meant a lender failure as well. And there's stuff about bright colors required for the paper in certain warning notices.

@TCama: Hip Hip Hooray!

@FatLynn: Agreed, but a politicians with a certain political leaning have demonized them as the cause of the problem, rather than a small piece of a much larger puzzle. Of course its easier to have a bumper sticker answer to all causes and solutions to complex problems (cut taxes, bomb them, limit mal-practice awards, etc.)

@hi: The White House says the recession is over

I have a good friend that works at a major bank in the foreclosure dept. He said they are overwhelmed by the amount of foreclosures on the bank books. Estimates are it will only get worse in the next 3 years. Many more pay option ARM and other adjustable exotica will be adjusting rates upward in 2010 and 2011. All those that screamed discrimination because they couldn't qualify for a normal 30 year fixed rate with 20% down payment and thus demanded the ability to buy a home, well, how do you like those phony teaser rates mortgage loans now?

@floraposte: So you're saying Vermont is a commu-facsist state? I mean think about it:

1) MUTUAL responsibility of the lender and the borrower? Do you really want an company to be responsible for its actions as well as individuals?
2) GOVERNMENT regulations- to restrict lending to those who qualify and and verify their financial condition? Do you want the government to tell you who can and can't buy a house?
3) Civil Unions that show that they don't care about family values, only the cost of their precious mortgage.
4) Also, wasn't there a communist who lived in Vermont and Vermont was an Obama state, so Vertmont is communist.

/channeling Beck

@chuloallen: The White House has also said that while the recession is over there is still a lot of work to be done. That's because unemployment is a trailing indicator of recessions. So yes technically the GDP is growing but tough times still lay ahead. Please don't try to make it seem like the President is painting a rosy picture of the economy. He hasn't.

@Oranges w/ Cheese wants it to be winter already:

2005 was more than six months ago. Srsly. OMG it's like four years! Like you must be totally old if you rmembr that!!1!!111!

Given that this is the worst it's been in four years, and the market in general is the worst it's been since the Great Depression, it seems likely that this is the most foreclosures we've seen in any one quarter in a long time. But maybe there were a million foreclosures in Q1 2004 and we've all just forgotten about it.

@rekoil: Ah, okay. Setting oneself up for a balloon payment--with the balloon being the Hindenburg.

@ARP: Plus, ice cream!

@Mr.Duke: The majority of sub prime loans were not made under the programs that helped low income people get loans. Most of the loans in the subprime market were made by independent mortgage companies that then sold the mortgages off to banks when the times were good.

@gStein_has joined the star bandwagon: It depends. Lots of the modular/mobile/trailer homes merely rent the land on which they sit. I looked at some in college that were very nice and seemed comfortable, though I chose to live in a dingy dank basement apartment with asphalt for a front lawn that was closer to campus.