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One in five homeowners with mortgages under water

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posted on Nov, 1 2008 @ 06:16 PM

One in five homeowners with mortgages under water

By Jonathan Stempel

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.

About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.

Seven hard-hit states -- Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio -- had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages.

"This is very much a regional problem, and people tend to forget that," said David Wyss, chief economist at Standard & Poor's, who expects home prices nationwide to fall another 10 percent before bottoming late next year.

"Most of the country is not in bad shape," he continued. "Things seem to be stabilizing in Michigan, but the big bubble states -- Florida, California, Arizona and Nevada -- are still very overpriced."
(visit the link for the full news article)

posted on Nov, 1 2008 @ 06:16 PM
This is so not good.

And while the article states that:

This is very much a regional problem, and people tend to forget that

That statement means very little... still one (1) in five (5) homeowner nationwide... not 1 in 5 in those areas... owe more than their homes are worth.... regardless of whether or not its spread evenly or concentrated in a few areas its a major drag on the economy and until they are able to get a handle on it, it will remain a drag on the economy.

Meanwhile the pigs have lined up at to get their share of the $700 Billion and mark my word by the time they have finished with it we will still be in this mess.
(visit the link for the full news article)

posted on Nov, 1 2008 @ 06:25 PM
I still want to see the data for owner occupied mortgages.......Everything I ahve seen is either "homeowners" or mortgagees.....

The banking industry (besides the CRA) made incredibly stupid 100% mortgages for investor properties.....

posted on Nov, 1 2008 @ 06:46 PM
Oh they have been stupid that's for sure... greedy stupid and what's so pathetic is that they thought that they were being so smart.

posted on Nov, 1 2008 @ 06:53 PM
Yes people are really throwing a lot of the blame on some stereotypical family or cross section of "dummies" that actually purchased homes as the culprit, in some instances I think there is blame to go to single family dwellers who used one of these loans as their primary residence that were either too stupid, desperate or were completely fraudalent in acquiring a mortgage, I really think the percentage of people underwater is actually higher.

IMHO speculators are a huge part of the problem though, the people that took advantage of purchasing 1 or 2 extra homes when they themselves in many instances owned a home already or was currently paying a mortgage.

There was gluts of condos purchased by people speculating and the overdose of flip this housers trying to get rich quick off of the bubble now foreclosed on or empty, to me the people underwater percentage wise is eating into equity not only of the loans and mortgage holders of the say the last 5 or 6 years but the longer that home values drop the more in years backwards does the equity reversal start to effect, your parents your grandparents that had nothing to do with the current situation that paid their mortgages on time and who traditionally pay their homes off.

For those of us who can pay our mortgages and will continue we are blessed but screwed in equity loss in the short to mid term though, however, if we had to for some unknown reason had to relocate or sell our homes for an unforseen circumstance such as illness etc and actually built up some equity, have lost out on it now because of the situation at hand, if you did all the right things, saved up a nice chunk say 25-30% to throw down on a house and especially the last 5 years, I bet most people on paper have lost their downpayment, and are now in the negative if they had to sell their home today.

I do not see how this problem with time alone will be resolved though, home prices are projected to decline at least into next year, and if you lost 30% - 40% in equity you can imagine it will take at least 5-8 years to break even, the people impacted in this situation are those who just retired or were preparing to cash in on their nest egg and either move out of a house to an easier to maintain condo or retiree community.

[edit on 1-11-2008 by phinubian]

posted on Nov, 1 2008 @ 07:24 PM

Good thread, I wont go on and on, some have been worrying about this for years, to use a david icke quote its like watching a car crash in slow motion.

I really feel for the families who are being evicted today over this, its heartbreaking, all for accepting the Norm and just wanting to get on in life with bad advice and no real protection.

The UK problem will be a lot worse when it comes home to roost in 3-6 months many of the mortgages here were 120%, or rather 100 mortgage or 95% and the rest as a personal loan on top at the mortgage rate of interest. this was typical of the Northern Rock loans.

Our housing market is more bubbled than the US one too and will fall harder and faster, if not only just because of our already very high fuel and tax levels, and general cost of living.

A single shop for the week in the UK at a normal supermarket is £60-100 if you want to eat well, get all the cleaning and personal grooming and hygiene needs and maybe one bottle of wine too.

When I was last in the USA I was amazed at the low cost of food shopping, and things as mentioned and snorgesboards etc if you are short, low fuel too. Even though the USA has higher Gas prices now its still nothing compared to the UK.

We have a minimum of 20% tax deducted from earnings (includes NHS healthcare too though) plus 17.5% Value Added Tax on all purchases like food ,clothes etc. They used to leave VAT of things like Kids Clothes and Books but that came to an end with Thatcher.

Britain's economy, especially in the South is based on the financial powerhouse of the "City" and nearly 1/4 of all wealth in the UK is from there or Financial Services.

With the UK being massively Call Centre Based too we handle lots of the major companies Customer services and sales too.

To be honest America has a chill which looks like it will become a very very heavy cold.

The UK will drop dead from influenza within 12 months, its truly scary and no one seems to notice or wake up, even with recent events.

In relation to this I imagine around 1/3 of homes in the UK will be in this position very very soon, and when they try and refinance, as most people are on 2-3 or at most 5 yr deals, well they wont be able as the Loan To Value, and the reversionary rates are horrendous.

Kind Regards,


Maybe we all could go here?A Paradise Island With No Money

ELF edit spelling.

[edit on 1-11-2008 by MischeviousElf]

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