Are all these foreclosures the result of people being given open ended loans for homes they cannot actually afford?
It was a scam, on all fronts. Lenders, brokers (mortgage and real estate) and borrowers all knew that the borrowers weren't actually qualified. But, if prices had continued to go up (paid for by whom, no one has answered), then the system would have remained solvant. We are dealing with the last lenders and last buyers in line and bam, the house of cards is coming down.
Folks have long predicted that sooner or later this would happen. The miracle is that it continued for so long. The other wonder is how fast it is all unraveling.
Lender accepts stated income and loans 100% on an adjustable rate at a low start level for two years.
After two years, payment increases dramatically and owners can't make payment.
They try to refinance, but value of the house went down and they can't refi enough to payoff original 100% loan.
They default and get foreclosed.
Actually it’s only about .5% and about half of those are second homes and investment properties. The banks and borrowers who made these transactions don’t want to pony up when it all comes due, they want taxpayers to take the hit, so they whine. Squeaky wheel gets the grease.