We are all soldiers now?
Camo is the new black?

A lot of military families are also used to moving around quite a bit. An ARM that's pegged for a few years might seem like an attractive deal versus renting if you expect to turn and sell the property within a year or two when you're moved somewhere else.

Alternately, you have reservists living near bases as well, and their families can become single-income equivalents in a hurry when they're called up or have a tour extended.

hi Tanta! happy remittance day!

apparently, debt problems are a good way to endanger one's security clearance.

so, not only will people lose their house, but officers may lose their jobs.

I have never understood why someone that moves every two to three years even buys a home. Some of the military families I have known ( Northern Virginia) have bought property where they ultimately want to live, but generally rent on their tours. Just the thought of all the fees generated by that buying and selling is overwhelming.

I moved from a Midwest city to a town built around a massive AF logistics base in Central Georgia at the peak of the Housing Bubble and witnessed that it’s a rather different economic universe near very massive base (this base’s payroll exceeded 25,000). I watched enormous sub-divisions mushroomed, clear-cut style; built on Spec. Builders often used in-house mortgage financing or had deals with sub-prime & Alt-A players I had never heard of. With REITs and apartments; almost all were heavy on mos-2-mos leases with no security deposits required for military families. The number of Pay Day loan facilities was breath-taking, esp the closer you got to the base. Nowadays, RealtyTrac, shows a kaleidoscopic explosion of defaults, foreclosures and REOs near Robins AFB and extending 20+ miles north, west & south.

The financial literacy of these military families is scary in its scarcity (but bless these guys & gals, anyway). But the worst of the worst is the pay that 20-something military folks w/families receive from the Pentagon budget. How many blog readers have checked military pay scales for enlisted personnel? I bet us readers think these folks get paid middle-income wages. Well make the effort, look it up and reflect on it.
CR, you MUST add some “enlisted wage data” to this badly needed post.

No, the ‘new’ post 9/11 military doesn’t do lil more than cuss and glare at em when informed that folks are having money difficulties. They know what they pay these folks.

When I was in college working a summer job on an AFB, I was making more money than many of the enlisted guys I was working with/for.

The money is not good, the conditions are not good, the outlook is not good, and sometimes even the education and training promises are overblown (and those are the biggest reasons people sign up).

Personally, I have some problems imagining that the foreclosures in Woodbridge have that much to do with Quantico alone. While it is large, it is really just a tiny part of the economy of Northern Virginia, much less the entire DC metro region.

Growing up in Fairfax, it is easy for me to note that Woodbridge was subprime long before subprime became the new black. Quantico may have something to do with that, along with Woodbridge's prime location along Rt 1.

Woodbridge is not really a walk away sort of place - it is more of the run at full tilt away from variety, at least in terms of attractive real estate.

About why the military buys when they are staying only 3 years....

Military members get a tax free housing allowance. It can either go to a landlord or to pay off a loan. 3 years@ 2K per month is 72K that can towards a mortgage loan with some of it banked as equity instead of to a landlord. Sell at the end of 3 years and extract 10-20K you have in equity or rent it.

I like the connection between The Bush Ownership Society and the subprime collusion that linked buyers and sellers in the mutual benefit of (retarded) exchanges:

From Heir Bush: "This is the broader definition of liberty that motivated the Homestead Act, the Social Security Act, and the G.I. Bill of Rights. And now we will extend this vision by reforming great institutions to serve the needs of our time. To give every American a stake in the promise and future of our country, we will bring the highest standards to our schools, and build an ownership society. We will widen the ownership of homes and businesses, retirement savings and health insurance preparing our people for the challenges of life in a free society. By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal. In America's ideal of freedom, the public interest depends on private character - on integrity, and tolerance toward others, and the rule of conscience in our own lives."

Tanta, I would bet that most could not come up with the 3% down requirement for a FHA loan. Subprime was the best they could do.

VA loans go up to 100% LTV, plus the funding fee (0.5% to 3.3%) can be rolled into the loan balance.

vboring has identified what is apparently a big problem for soldiers with mortgage trouble. There are lots of military jobs that require security clearance. One's credit rating is among the main considerations in granting a security clearance.

Many military units have reportedly instituted programs to encourage those with mortgage and other forms of credit trouble to tell their CO or base security officer so the problem can be addressed. The military is having trouble enough with retention, without letting this stupidity cost them people. The problem is that the efforts aren't universal, aren't always as well advertised as they need to be and may not be trusted.

Jas, Tanta is not being facetious. Every form of financial crap known to man is aimed directly at our soldiers.

Sarah, I do remember something similar along the lines of what you wrote ie. illegal to foreclose a military person in active duty, and for the next 6 months thereafter.

You are correct: lots of lenders were (still?) ignoring the law. I remember a particularly egregious case were the AG of the US (Ashcroft) got so incensed when he learned about it, that he sent a top legal aide "talk" to the lender during the Court proceedings.

That such intervention was needed in the first place shows that in fact, there are two Americas.

One, where people work, pay their bills, and try to get by honestly. To these folks, patriotism is white, red and blue; it's about doing what's good for the country.

And then, we have the other America, where people schemes their way with financial engineering, make a lot of money, and always try to get more, as long as it is borderline legal. Of course, if the price is right, screw the law. For these people, patriotism has only one color: green. The rest be damned, since they "deserve" everything that they got, and then some.

Jas is right: either we correct this situation ASAP, or something truly ugly will happen within the next 2 decades...if not during the next year.

Guys,

As an enlisted vet with 6 years living in the norfolk and then Charleston areas. And then going to college to emerge back in Atlanta area in 2000 when 7 of the 10 fastest growing counties in america were Atlanta burbs (what i call the start of the bubble). I am now outside DC as a civil servant engineer.

First, E-4's with or w/out families should never be buying houses. There is married housing on every base and 95% of bases have new privatized both officer and enlisted housing.

As a Vet I cherished being one of the few out there that COULD get a 100% govt backed loan because of my service. There was a point in time where the rates were a little lower and a time where they were higher.

VA loans are available for the active duty folks too. True most active duty move every 2-3 years so it is quite stupid, unless you are living where you want to retire, to purchase.

But up here in Officer heaven in MD officers are losing money on homes they bought in 2004 and beyond. So not all are immune.

Trust me we were not targeted, we were enticed, like many in the public that these low interest teasers were good thought if moving in two years and values shooting up.

But as we still see very few people saw a bubble coming, many denied its existance and some still deny.

But that aside, yes CO's still get involved, but can't do anything with the impossible. Quite frankly if they couldn't get what they needed through the VA that should have been their first clue.

I still rent. And will continue to do so, even with the conforming limit raised so i can get whatever i want in the DC burbs. But like many on here and other sites. I do my homework. I watch the market. I dont impulse buy. I know with 18 months of inventory of houses i like two things will happen, the prices will continue to go down and 2) when we hit the bottom and turn around it will be evident month to monthg from local MLS stats. So i wont miss a speeding train.

Its not about afghan or Iraq or Bush its about people inherantly wanting more than they can prudently afford.

what happened to the 28/36% limits ...Oh those were from banks i guess....

The best the military could have done was to require request chits from their memebers who desired to purchase off base.

True, many will lose their secret and above clearances, but many that had those should have also had the intelligence to no better... not always the case when you can literally pick your monthly payment.

IMHO

Tanta, Are there any stats showing the foreclosure breakdown for loan types? I would like to know how VA loans preformed compared to 2/28, 3/27 other ALT A loans.

I am guessing that VA loans in those locations are not showing the foreclosures seen in other loan types.

I wonder if everything would have been fine if there were a limit of one subprime loan per family-investor?
i.e. no zero down for second homes and
investors.

Jim a,

True, called up , but I believe, and i may be wrong, but that the intent was yes long term commitment but to backfill the active that worked here or FOB's in forgeign countries like Germany, etc where they would depoly in country and guard would backfill active stateside and reserve would backfill overseas...

maybe that just seemed to logical....

Bob Dobbs | Homepage | 05.27.08 - 12:45 pm |

Bob,

The Commandant wanted first tour Marines to be/stay single. Not all Marines. I did 4 years single. It is the ONLY way to fly. Frankly most bases when I was in didn't have enough decent E-3/mariied and below housing...

Chris

Blitzkreigen 1.1 writes:
I like the connection between The Bush Ownership Society and the subprime collusion that linked buyers and sellers in the mutual benefit of (retarded) exchanges:

in the parlance of the computer gamer youth we've been "owned"

Military families are notoriously pathetic with their finances, for a variety of reasons. Having been one of them, I feel both allowed and obligated to point that out. Most of them deserved to be offered a sub-prime loan, as they were sub-prime risks.

So why is this bad? I'm lost on that one. Would you rather forbid them the ability to get a loan available to non-military personnel?

Outlaw them for everyone, or no one. Don't pick on the military folks with more paternalistic policies. When you're in the military, you have enough of those anyway, and frankly, they're the source of most of the trouble.

If payday loans are bad for the military, they're bad for everyone - outlaw them.

The insurance scam is a different animal, since it's targeted at military, by ex-military. Those folks should just get horsewhipped in the public square.

But please, enough with the paternalistic sheltering (or should I say, limiting) of the folks who fight and die. They deserve better.

Oh, and while you're at it, if you want to get worked up, get worked up that an e3 with a family of four qualifies for food stamps. Call your congressman about THAT, before worrying about this tripe.

A few facts and observations from a Norfolk RE Broker..me.
1) it was cheaper to buy than to rent a few years ago..not today.
2) fewer of these foreclosures on military families are VA loans for the simple reason that during the late heyday mortgage companies persuaded them a 100% conventional product was cheaper. VA loans do pay less to the mortgage company to process.
3) besides the usual things in civilians lives that cause them to buy or sell, the service person WILL be in San Diego next Tuesday if the Navy says he/she will. Now he/she has two payments for housing...which one would you pay?
4) servicemen are neither more nor less savvy than their civilian counterparts in my experience.
5) I never experienced "targeting" of service memebers by mortgage folks...the good ones treated all clients well, the bad ones screwed anyone they could, military or not.
6) in the mid 90's the list of VA foreclosed homes offered for sale by VA in this area ran at about 200, today there are less than 15.

Live goes on, until it doesn't.

As to why soldiers should be allowed to be prohibited access to subprime mortgages when civilians are not, the answer is simple. The military is paternalistic by design. There are lots of things which are forbidden those in uniform which are not forbidden the rest of us, like insubordination, quitting the job, moving to another state, refusing an assignment.

Keeping a security clearance is contingent on keeping good credit. To the extent that a subprime loan represents risky borrowing, it represents a risk to one's security clearance. There is ample reason to deny soldiers subprime loans.

OrgFrank,

F' man '73 crap i was 7 yrs old and had 3 channels on my rotating antenna to choose from... Was that McNamaras doing? Guilt maybe.... so that the supposed "rich kids" that "hid" at home and went to school would be ensured the equal opportunity to get shot at.... argggh

Seriously yeah the total force policy is a continuing thingy...

they (DOD) have attempted to change and get more into one total force, you know air force planes, flying army cargo, Navy ships bringing army and marines... That was what Rumsfeld was conitinuing to do under his terms and the QDR's he went through (quadrennial defense review)i believe his statement was "this is nuts" as he was attempting to make us more modular...i.e. why can't we combine bases as needed and best deploys our Total Force....you have to understand that there are a lot of 4 stars that do not want to give up the turf they worked so long and hard to get... Rumsfelds worst enemies were those guys within when it came to his obligation under TFP..
The war over the National Guard - Salon.com

Secretary of Defense Donald Rumsfeld is also concerned about the constant Guard deployments, as well as the need to fight terrorism more rapidly. He wants to retool the Total Force Policy, making it easier for the United States to wage a major war without mobilizing the Guard.

In a memorandum dated July 9 and addressed to the secretaries of the military departments, Rumsfeld stated he wanted to "structure active and reserve forces to reduce the need for involuntary mobilization of the Guard and Reserve" and to eliminate that need "during the first 15 days of a rapid response operation."

probably a side of Rumsy most didn't know or appreciate....

BTW, God bless our A-10's though, how many 11:59 reprives from the governor have they had..

"There is no mortgage insurance with VA"

?????

If you mean no payment for PMI b/c the VBA guarantees the loan, then I agree. If not, then no I don't agree.

On Norfolk-- If I read the latest OFHEO HPI right, the top 3 metros in the entire nation that came closest to literally doubling their median home price over the past 5 years-- were Honolulu, Miami... & the VA Beach/Norfolk MSA.

Norfolk bubbled from 2003 on, from the big jump in military pay & housing allowances in '01/'02 earlier noted here. Between that, BRAC closures, & the increase in military & DOD arriving here after 9/11 & Iraq, suddenly all these folks could buy rather than rent. This extra demand puffed a huge local bubble, tho a very under-the-radar one. (That Bloomberg article is the first I've seen to pick up on the relationship between military pay raises, bubbles, & foreclosures.)

"Time" alone is why many military here didn't use VA/FHA loans-- houses sold faster than the VA could do the appraisals. With homes selling within hours of listing, in bidding wars (with "no contingencies")most sellers here flatly refused to take VA financing, & wrote "no VA/FHA" into their listings-- why tie up your sale waiting for a "picky" VA appraiser 3 weeks from now, who might not hit your new record-breaking (& outdated within days) comp?

Many military here use Navy Federal Credit Union (world's largest)& in summer '03, NFCU was so overloaded you had to register to get on a 2-week waiting list before you could even DO a mortgage app. The demand 'downed" their online app. system. Also, NFCU offered their own in-house military-geared loan product, lower than the VA rate.

Those are some reasons why many military here didn't go VA/FHA, or with legit lenders like NFCU. The sales pace was so frantic each summer that many people-- not just military--grabbed the quickest loan they could find a human to write up, because as almost every last RE agent here said-- "If you don't buy it right now, somebody else will".

And people here did-- homeownership rates shot up to like 75%. But now, in '08, there've been 3 homes for sale for over 3 months on my block-- 2 owned by absentee military who had to leave.

I too wish to thank all above who have shown some understanding of the inherent difficulties in military life.

Granted "serving" is voluntary, & yes volunteers "know" what they're signing up for-- just like every married person on here "knew" & was "told" beforehand what signing a marriage license entails.. but hey--didja really "know-know"?

My apologies for going so off-topic, but spent yesterday at a Memorial Day bbq here in Norfolk talking to some active duty folks.

It gives a different perspective.

The last 10 years, (as long as we have been military) if you stayed in one location 3 years, you would break even if you bought. Cost of living was usually pretty close, and you got to guarantee that you wouldn't have to move your family to a new house mid-tour (and move your school-age child to a different school) if the owner came back or sold the house. The worst that could happen would be that the housing market might not appreciate at all and prices would stay flat, right? So we bought our first location (rented it out after), bought our third location (sold) and bought our fifth location (NoVA). And now that we are coming up on our sixth move, the market has dropped, and because prices bubbled so out of proportion to rent, it would be a 10 to 15 grand loss to rent it out, with no hopes of the market recovering soon. But our loan can not be modified because it is way too good. (and it is! If we stayed here we have no problem paying a 6 percent fixed rate loan) And when we got a buyer and submitted a short sale package that we are waiting on, we were told that our finances are too good and these short sales are for people who are more "on the edge" financially. As if we would be better off having bought twice as much house (we bought a 1300 sq. ft. townhouse while we watched others buy 3500 sq. ft. mcmansions) with an Arm and THEN we'd be approved.

And yeah, Lorton sucks. And its been hit hard by foreclosures. Over development of McMansions, lots of risky loans and speculation, and in one year prices are down about 100 grand.

artichoke-- that aspect of "military impact on local bubbles" never occurred to me before-- thanks.

I do recall here in Norfolk a surge on some years back to get rid of substandard housing & replace it with new. Whether "they" actually did replace it- and unit for unit- I dunno-- will try rootin' round in local paper's archives to see.

I do know that last year, Norfolk was dropped from the "critical housing area" list.

But you're right-- depleting the stock of military housing available of course forces more military into precarious markets, with an as yet unmeasured impact.

And tearing down usable housing just stinks to high heaven-- Cuz wasn't that the whole point of "military housing" in the first place?-- to provide the housing necessary for servicemembers that is independent of the vaguaries (sp?) of local housing markets?