Posted on 03/17/2015 9:38:51 PM PDT by george76
Some 5.4 million homes, or 10.4 percent of all homes with a mortgage, were still in a negative equity position, or "underwater," in the fourth quarter of 2014, according to CoreLogic, as their owners owe more on the mortgage than the home is currently worth. This is down considerably —18.9 percent, from a year ago—but it still keeps these borrowers from putting their homes on the market, because they would lose money. ..
Additionally, of the 49.9 million U.S. homes with a mortgage, approximately 10 million (20 percent) have less than 20 percent equity, and 1.4 million have less than 5 percent, according to CoreLogic. These homeowners also would have a difficult time selling because not only would they lose money in the process, but they also might not qualify for a new mortgage.
(Excerpt) Read more at cnbc.com ...
Many FReepers think those home equity loans were funding cruises and new sets of wheels for foolish (or reckless, or conniving) borrowers; I think the reality (which the government didn’t want exposed) was that much of it was used for basic necessities - masking the fall in our standard of living. As the dust settled, there was little for the banks to repossess; the food had been eaten, clothes worn, and heating fuel consumed.
Now people have no misconception about where we stand; industries built around discretionary income are dropping like flies. Here in NJ 1/3 of our casinos are gone; I expect most to follow shortly.
Every time you buy clothing or electronics with a credit card you are underwater as soon as you walk out the door. You don't stop paying the lender just because your pants and flatscreen are no longer worth as much as they retailed.
I really don't understand the thinking.
I wholeheartedly agree about paying off commitments you have made - loans are commitments.
That said, banks have a financial responsibility to owners, shareholders, etc. to make sound financial decisions using due diligence. When the government stepped in (Barney Frank, SJL,and Jaime Gorelick, Franklin Raines, Jim Johnson of Fanny/Freddy fame), and demanded banks loan money to people who had no business getting anything but a payday or car title loan, banks did what anyone would do.
They bundled up their liabilities and sold them to other banks and investors with guarantees by the government. We began to see things like credit derivatives. All this caused by Democrats IMO.
Loans got so easy, they were loaning over value, sometimes upwards of 125%. They were also loaning out huge amounts for junk houses - ramshackles a huckster could get for a song, get an estimate for repairs and then a fake assessment of value based on the repairs and a "loan" for over 100% of that potential value. There was Obama daughter who bought a house for like under $50K, got repair and after-repair inflated value estimates and got something like $400K. Never fixed a damned thing and walked off.
Actually, my property tax valuation has remained the same since Obama was elected. Tax millage only went up very slightly last year.
I think your thought is probably right to an extent. The underlying problem is that these prospective homeowners should never have qualified for a home loan in the first place, whether they used up the extra in needs or for frills.
Definitely; the government didn’t want people to know how bad it was, and the borrowers didn’t want to accept the permanence of what had transpired. Globalization destroyed much of our economy, and there is no light at the end of the tunnel.
Young people today probably see this much more clearly now; they would have been our next generation of homeowners, but that dream is dead. Many I know won’t even commit to buying cars - they just lease (and they aren’t high-end cars, either). Families are out of the question entirely...
Now imagine your boss announces that your job is being relocated to another state 500 miles away.
That is what "trapped" is all about. I agree that it's something of a liberal construct, but it's a real problem for people who may need to sell the home and move somewhere else for reasons completely out of their control.
Botched that last post.
People that got hit the hardest were taking out arm, option arm, and alt-a loans. Once rates started to rise it was game, set, and match for many.
A lot of that nonsense wasn't going on in my area, so your strategy works..
balderdsh...... there is no loss if they like where they live and don’t sell. If they like where they are nottrapped
I suppose it's the taxpayers fault. /s
This.
I get angry when I hear the likes of Rush Limbaugh saying that "everyone should be an entrepreneur" or "everyone needs to reinvent their career every five years".
People who think they will have to do that are overwhelmingly not people who tend to marry, start families, and put down roots in a community.
If we can't figure out a way to provide stable jobs to those who are willing to work hard, conservative family values are basically toast.
This times a few million is the problem. We will not get back to a properly working economy until housing is sold at market clearing prices.
We are 8 years in and still underwater. Not that big of a deal since we aren’t looking to move and haven’t lost a job and needed to relocate. Definitely has pushed aside some needed improvements though.
I think the trapped idea comes from the flipper mentality. Americans got the idea that you don’t buy a house to live in you buy it as an investment and sell it after two years to move to a bigger one. My brother in law did that three times and now he’s in a funk because he can’t sell at a profit.
I think the trapped idea comes from the flipper mentality. Americans got the idea that you don’t buy a house to live in you buy it as an investment and sell it after two years to move to a bigger one. My brother in law did that three times and now he’s in a funk because he can’t sell at a profit.
I think the trapped idea comes from the flipper mentality. Americans got the idea that you don’t buy a house to live in you buy it as an investment and sell it after two years to move to a bigger one. My brother in law did that three times and now he’s in a funk because he can’t sell at a profit.
That would make an uncomfortably large number of big banks immediately insolvent.
This game of "Let's Pretend" is going to go on for quite a while longer.
To your earlier point about conservative values and entrepreneurism, it's quite remarkable how many "entrepreneurial" pursuits these days are nothing but scams. Internet marketing being the biggest, although the economy a decade ago was heavily based on another one - mortgage lending. We don't make things and provide services to our local communities, we scam globally - thus the need for "constant re-invention" as each scam gets figured out and avoided by the public.
IT work is one of those scams, by they way. The "mystery of computers" led to gross overcompensation by companies who found the whole process of automation a headache - now the backlash is leading to undercompensation and outsourcing. Where there is value, there will eventually be stability. The hard lesson for many long-time IT workers is that they have not been providing nearly as much value as they thought they were.
I do because the vast majority of these folks are decent and honorable in that they’re continuing to pay their mortgage. They probably would like to refinance to a lower APR or probably even sell...but the system has them trapped.
They’ve been screwed by the USG and the banks...like I was before I was able to turn the corner on my house in the past year.
Not like the vast numbers of scum who cashed out equity and then ran from their responsibilities leaving it to the taxpayer to bail out the banks.
I care quite a bit...so that brings balance back to the universe.
Cry me a river. If you can’t afford it sell it. And don’t expect taxpayers to bail you out.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.