So, Why is a Foreclosure?

The dreaded radio blurb has reared its ugly head again this morning. After being kicked out and then re-welcomed to UNM park spaces, after obstructing traffic in several high volume roads the cadre of generally aggrieved miscreants is back. Under a slightly new name, Occupy Albuquerque losing the Un- prefix, whatever that meant, was reintroduced this morning by a ten second 770 KKOB news blurb. In this latest incarnation the Occupy folks are planning to discuss amongst themselves ways to stop foreclosures. To which I wonder, really? The idea that a bunch of know-it-all incoherently and continuously aggrieved layabouts with no practical understanding of how and why things are will actualize any kind of constructive solution is laughable.

Protesting the existence of foreclosures and blaming faceless entities for foreclosing on homes ignores the real issue. Foreclosures occur when some kind of change, to income, to market conditions, to mortgage terms, leads to a mortgage loan recipient to be unable to meet their financial obligations on the mortgage. Following negotiations with the loaning entity and unsuccessful attempts at selling the home above the value owed the loaning entity forecloses on the mortgage taking possession of the home resulting in a degraded credit rating for those whose loan was foreclosed that requires many years to build back up.

For many, changes are completely unforeseen and there are programs to help those in extenuating circumstances. They are supposed to be a very small minority. Recently, the number of foreclosures has increased greatly, effectively mimicking federal housing initiatives forcing lenders to decrease standards for what is considered credit worthy leading to more demand in the home market leading to higher prices. It may be attractive for a person to follow the minimum guidelines and buy as much as permitted but it is not prudent. The loan recipient must be responsible for understanding their capacity for repayment. The loaner cannot be expected to hold their customer’s hand and cannot discourage anything within federal guidelines because to do so is illegal.