Banking

I honestly don't think it's a good idea for banks to go into the real estate business, but that's what bankrupt homeowners are forcing them to do. Why? Because once they walk away from their homes, the bank can't come back to get more of their money :

Foreclosure used to be a last resort, something that hard-pressed homeowners would scrimp and plead to avoid. But as the subprime lending crisis sweeps up millions of borrowers nationwide, some are deliberately choosing foreclosure as an early option.

As their home values tumble and their mortgages rise, these "walk away homeowners" decide to cede their houses to their lenders.

"It's throwing good money away after bad" to pay an escalating mortgage on a home that's plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. He and his wife, Tishara, stopped paying their mortgage in February. They signed up with a new company called You Walk Away to help guide them through the multi-month foreclosure process.

Well, here's a quick run down on the timeline of events that led to this disaster.

I am running out to pick up the kids, but will be back with more. I just twitted that I feel the stock market is like a really bad telenovela. So now I feel compelled to blog why. Gotta go pick up the kids first.

I have a friend looking for work in the corporate world. It's been rough, one of the reasons being she is competing for work with people at least 20 years younger than her.

We were musing about how far away we are from realizing the middle class dream of a steady and retirable job as well as that house in the suburban sky. Compared to our parents, our education far exceeds them; yet when it comes to actual middle class accomplishments, boy are we lacking.

Then I read this :

Foreclosures Spurring Blight In Central Valley

[...]
As California house prices soared, cities in San Joaquin County attracted buyers priced out of the San Francisco Bay Area. Developers built more than 30,000 new homes in the last six years. But with the spike in adjustable mortgage rates the flood of buyers turned into a flood of defaults - 11,000 in the county in the past 18 months.

Not long ago an overgrown area with a murky pool that Blackstone toured was someone's backyard paradise, but now foreclosure has taken it all away. There and at hundreds of other properties across the county, even the swimming pool has become a hazard - a source of mosquitoes and West Nile Virus.

County workers who used to patrol swamps and streams now do their work in neglected back yards.

It gets worse though. Those who believed they could gamble their future on a no-down no-interest loan that would balloon 5, 10 or 15 years down the road are now gone. As in war, it's the survivors who stay behind to cope with the neverending pain left by the wounds of the mortage meltdown :