Wednesday, January 10, 2007

Update on House Hunting in OKC

I talked with a foreclosure attorney yesterday while I was at the bankruptcy court here in Oklahoma City. He told me that just one law firm was referred 600 cases for foreclosure just last month alone. It is expected that these houses will come on the market in April or May.

I don't think that spells a "market bubble" so much as a depression of prices due to the economy going downhill. Realtors are not quite sure how it will affect the market here. But the most likely result is that prices (which are already cheap by national standards) will probably fall even further. Not by California or Florida levels, mind you, but probably some as all of the foreclosed properties come on the market.

Of course, the good news for me is that I received three (3) calls for bankruptcy services yesterday alone. I haven't had three calls in a day for bankruptcy services since before the law changed. One thing about the law practice: it's feast or famine. We bankruptcy attorneys have been suffering from a famine for over a year. I think we are due for a correction. The main reason why people have not filed in the last year is because the price doubled, when you add in the extra attorney fees (up 50%), increased court costs (up 50%), costs of credit counseling (not required under the previous law) and other assorted "paperwork" costs that didn't exist under the old law. I think you are now starting to see the debt problems bubble to the service.

The math just doesn't lie. We have had a lack of internalized costs to society (i.e. health care costs) coupled with overconsumption (i.e. people buying stuff they don't need, with money they don't have, to impress people they don't know) that has put the country in a position of having too much debt floating around. The old saying "you can't get blood out of a turnip" is still true. That excessive debt will have to be resolved somehow. Restricting access to the bankruptcy courts will not cause those debts to be paid back, they will just result in more suffering and stress for the middle and lower classes whose wages have not kept up with those costs.

No one in congess that I am aware of have been talking about regulating interest rates and fees on credit cards. The credit card companies (who were most instrumental in lobbying for the change in the bankruptcy law) have been raising interest rates and fees (and increasing profits) to excessive levels -- even though their costs of borrowing have not gone up. They have also instituted "Universal Default" clauses which punishes someone who ends up being late on any bill, even if they are never late on their credit card payments. What we are seeing is excessive greed by those who already have more than they need.

Our values are out of whack. We are overdue for some kind of correction in our values as well as our markets.


Anonymous said...

Amen, Fred. These credit card companies know people can't pay back the balance in full, so they jack the rates to 23% on one late payment--and the late fees are now $30-$40 I think.

Isn't that usury by anyone's book?


OkieLawyer said...

Actually, the default interest rates are over 30% more often than not, and the fees are up to $49 (late fee, over the limit fee) and they are charging to make a payment over the phone. Some credit card companies are not allowing payments made to credited immediately. This can add more fees because it might make them late, etc.

It's a mess.