Especially for people who refinanced the over valued homes in California and bought a vacation home in another state. They are going to be hit worse than people who just bought two luxury autos and paid off credit cards. Because lenders will soon demand the difference between to loan amount and the market value of the properties. Upside down really means upside down. It is going to worse than ugly.
"Especially for people who refinanced the over valued homes in California and bought a vacation home in another state."
That's a small group. A larger group is made up of folks who refinanced more than once, to pay off bills, get nice stuff, etc. Most of them are SOL on this one. Most didn't really understand the terms of what they were doing, and Ameriquest and others were predatory in seeking those borrowers.
These are the folks who are already living from paycheck to paycheck and juggling bills to pay their mortgage. They'll soon be defaulting, and lenders don't want the houses.
Being upside down on debt is a very bad thing. It's going to cause a reverberating cycle that's not going to be good for the economy.
Are you saying mortgage loans are callable? I thought that was illegal.