Number of U.S. Homes With Negative Equity Is Stunning 44 comments
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Do you wonder why Citibank (C), JP Morgan (JPM) and Bank of America (BAC) are rushing to rework mortgages and keep people in their homes? The following chart tells us why.
This chart is stunning. The shear number of homes, 30% in many states, means the banks can't resell them for anything if they foreclose on them. It is in the banks' best interest to keep these people living in their homes. The losses the banks will take holding the real estate will far outpace whatever diminished losses they take on a reworked mortgage.
Months ago, before this whole mess got started, there was a plan for banks to cut loan payments in return for a portion of the future appreciation of the home. One has to wonder if some of the price decline from the flood of foreclosed homes hitting the market could have been avoided had banks acted sooner to keep people in those homes.
Disclosure: Long C
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This article has 44 comments:
Packing those loan that were a product of Collusion is FRAUD !!!
What are we teaching our kids? Fraud pays !
I wrote an article this morning at www.KeepAmericaAtWork.... that describes the real problem of why our manufacturers, retailers and raw material producers are suffering now.
The solution is very simple - Give me the names of the CEO's and the company names so that I can add them to the "Wall of Shame" on my site so that our fellow citizens can see exactly who is responsible for this financial crisis.
=== article follows ---
Polls,
You love them or you hate them or in my case, you distrust them because they don't provide the detail so that you can verify the accuracy of the data.
But on the other hand, I'm noticing some interesting things in the "Employed" poll that I am running this month.
As of right this minute we have:
19 employed for 57.6 %
7 unemployed for 21.2 %
5 looking for 15.2%
2 gave up for 6.1 %
Now according to the cia's web site we have about 300 million people in america, so lets divide that into 3 age groups.
Lets make the assumption that 100 million are under the age of 18 which leaves 200 million.
So we have an age group from 18 - 98 and 200 million people
A lot of people either retired at 65 or possibly were forced to retire at 65 which leaves from a total of 70 working years:
33 years of retired people and
37 years of working people
That is awful close to 50 % this early in the morning.
So these rough numbers tell me we should have 100 million working and 100 million retired as approximate numbers.
Now I read in one of the government reports a while back that our government uses 150 million workers which makes me wonder how they arrived at that number, but thats another topic at a later date.
So we have 100 million workers, now lets deal with the numbers above and we'll add the 19 employed and the 5 looking for a total of 24 working and we'll add the numbers of 7 unemployed and 2 gave up for a total of 9
So now we have the numbers of 24 and 9 which gives us 33
So now we will divide 100 million by 33 and we get 3,030,303 per number
So now we're going to multiply 3,030,303 times 24 and we get a working population of 72,727,273
And now we're going to multiply 3,030,303 times 9 and we get a unemployed populaton of 27,272,727
Damn, does that give us an unemployed percentage of 28 % instead of the 6 % our experts are telling us.
Now do you see why our economy and the economy of all the democratic countries is suffering right now ?
As for you other democratic countries, run the numbers on your own country and if your leaders have followed America's lead and sent your jobs offshore, then that will explain why you're going through the same problems we are.
Jolly Rancher
There seems to be some kind of massive fraud somewhere
along the line.What we need is CIA to tackle this problem,not Federal Reserve.
as it relates to moving forward, "there must be required fiduciary relationships" between lender, appraiser and mortgage originator to clean up the way loans are "stretched" to close same. The current standard operating procedure amongst them now provides each with a shield of exculpation that is nearly criminal and the risk to bond holders of this paper gets passed along buried under the rubber stamps of the Country-Wides of the world; thusly, the owners of those bonds have been duped. This complete vacuum of culpability between the aforementioned parties is why we are here today.
-8Alpha
My new neighbor bought the house from my previous neighbor who worked as a city marshal. She (city marshal) bought her second house next to mine for $265,000 in 2002. In September 2008, the house was on foreclosure, my new neighbor bought it at 50% discount from the bank for $275,000. So my previous neighbor took out about $200,000 in the last 6 years. She also gave up her first house, and now live in a apartment. Government thinks that people like her need free check.
If 5 millions house owners are like my previous neighbor, each pocketed $200,000 cash for each house, sent part of the cash overseas, tell me that our financial industry won't collapse. Blame everybody else but the real culprits.
where is that chart from? its truly ugly
that chart is ugly, where is it from?
thx for the post
The Feds need to make stipulations that any corporation or financial institution receiving the funds first replaces their CEO's, CFO's , top execs and Board of Directors that created the mess.
As for selling mortgage accounts from one bank or institution to another laws need to be in place that they are sold "in whole" and not broken up into fractions going to multiple buyers.
We all seem to think that it is 'our money', or 'my money', when in effect it is the USA's money, and they will let us have a little if we do what they want us to do.
The horse was led to the water, but the water was poison. Who's at fault? The horse, or the man who led it there to drink? THe banks were led by the regulators to buy this filth that they created.
Now for the automakers............... yeah, that's the same thing!!!
I saw it coming when values were up 20% a year.
I saw it coming when I drove by $80,000 homes with hummers &
mercedes benz & bmws in the driveway.
I saw it coming when they started building 10,000 sq ft homes to
justify the price of a 2 million dollar lot.
Then the market dried up.
Too much easy money
too many greedy people
All Mortgage brokers should be licenced and regulated
Sub prime should be FHA FNMA enterprize only.
Let the banks sell A paper
If you want the people bailed out then the contracts should be
owned by the treasury. give the interest to the treasury.
If you go belly up then the treasury sells the house.
get the banks out of all this.
Blame all the dopes that blocked regulation over the last 5-10
years. They supported and bullied the banking system to support
these loan products. Now the real estate market is correcting 30%
or more as I predicted.
Now I go give estimates on contracting work. People don't want
to repair their homes....no money, why bother, etc....people view
a home as a burden not a investment. Ask your parents that lived in the same house for 40 years and paid off the mortgage. Its a roof over your
head be thankful you have it.
If these people want to go bankrupt go ahead its 7-10 years of no credit. Blame the bank? did you blame the bank when you got that 3% down GPM loan.....no you thought you were getting something for nothing.
Now you want them to pay for it. Did you read the good faith estimate? did you have a closing attorney read over the contract? its your fault.
GO ASK YOUR PARENTS OR GRANDPARENTS THAT WENT THROUGH WW2 AND THE DEPPRESSION WHAT THEY WENT THROUGH ; GROW UP; PAY YOUR BILLS AND LEARN TO READ IDIOT.
Local governments across america need to
CUT THE NUMBER OF BUILDING PERMITS to a fraction of what they are.
Building starts are down sharply, but there is still an oversupply of houses.
THE SOONER THIS OVERSUPPLY IS RUN DOWN,
THE SOONER THE HOUSE PRICE DECLINE WILL END.
The trouble is, not everyone can stay in the house they're in today for the next 12 years while their underwater equity comes back to even. People lose jobs and then get jobs in other states. People get married and have children.
The inability for our workforce to be mobile is another hidden cost of this mess and I don't know how to put a number on it but it's big.
Remember, this crises started before the economy hit a wall. These people never could afford to pay off their loans without a windfall of increased home equity.
I said it before here: these homebuyers were like options traders. Their purchase of a house was like a call option. Because the stock price -- the home value -- did not go up but went down they will not exercise their stock option.
Any inconvenience or even disruption to the lives of families that gambled on housing is of their own making. The government cannot remove or even attempt to remove the moral hazard inherent in all this. That would be very dangerous.
1) one third of the people in the u.s. own their houses free and clear. I'm not sure what the geographic distribution of these free and clear owners are but I have read this in many places.
2) most prices are still above where there were in 2003-2004. Could 30% of the homes turned over or been refinanced to close to assessed value in the time since 2003/2004?
In fact, if Dr, Martin Feldstein of Harvard is correct, we are still seeing simply the beginning of the housing crisis.
Those people were gone a long time ago, The ones in trouble at this
point bought with plenty of income and plenty of saving's. But because
of the economy, they have lost a job or had there health insurance doubled or there pay decreased to help there company survive. Most have not only wiped out there savings but also there 401 k's and any other means they have to stay in there home. Help them out first then you can go back and prosecute the rest of the criminals
On Nov 12 07:19 AM Useral7899 wrote:
> The people that got the loans, based upon farlse information, are
> also fraudulant. How many have been prosecuted since this began?
> These are the same people that are seeking a bailout.
> What are we teaching our kids? Fraud pays !
On Nov 12 07:38 AM vbierschwale wrote:
> One thing I don't think that people realize is that this negative
> equity is paper only as long as they don't try and sell and this
> is only a symptom of the real problem.
>
> I wrote an article this morning at www.KeepAmericaAtWork....
> that describes the real problem of why our manufacturers, retailers
> and raw material producers are suffering now.
>
> The solution is very simple - Give me the names of the CEO's and
> the company names so that I can add them to the "Wall of Shame" on
> my site so that our fellow citizens can see exactly who is responsible
> for this financial crisis.
> === article follows ---
>
> Polls,
>
> You love them or you hate them or in my case, you distrust them because
> they don't provide the detail so that you can verify the accuracy
> of the data.
>
> But on the other hand, I'm noticing some interesting things in the
> "Employed" poll that I am running this month.
>
> As of right this minute we have:
>
> 19 employed for 57.6 %
> 7 unemployed for 21.2 %
> 5 looking for 15.2%
> 2 gave up for 6.1 %
> Now according to the cia's web site we have about 300 million people
> in america, so lets divide that into 3 age groups.
>
> Lets make the assumption that 100 million are under the age of 18
> which leaves 200 million.
>
> So we have an age group from 18 - 98 and 200 million people
>
> A lot of people either retired at 65 or possibly were forced to retire
> at 65 which leaves from a total of 70 working years:
>
> 33 years of retired people and
> 37 years of working people
> That is awful close to 50 % this early in the morning.
>
> So these rough numbers tell me we should have 100 million working
> and 100 million retired as approximate numbers.
>
> Now I read in one of the government reports a while back that our
> government uses 150 million workers which makes me wonder how they
> arrived at that number, but thats another topic at a later date.
>
>
> So we have 100 million workers, now lets deal with the numbers above
> and we'll add the 19 employed and the 5 looking for a total of 24
> working and we'll add the numbers of 7 unemployed and 2 gave up for
> a total of 9
>
> So now we have the numbers of 24 and 9 which gives us 33
>
> So now we will divide 100 million by 33 and we get 3,030,303 per
> number
>
> So now we're going to multiply 3,030,303 times 24 and we get a working
> population of 72,727,273
>
> And now we're going to multiply 3,030,303 times 9 and we get a unemployed
> populaton of 27,272,727
>
> Damn, does that give us an unemployed percentage of 28 % instead
> of the 6 % our experts are telling us.
>
> Now do you see why our economy and the economy of all the democratic
> countries is suffering right now ?
>
> As for you other democratic countries, run the numbers on your own
> country and if your leaders have followed America's lead and sent
> your jobs offshore, then that will explain why you're going through
> the same problems we are.
>
On Nov 12 12:12 PM jimmy46 wrote:
> No one has suggested this, BUT:
>
> Local governments across america need to
>
> CUT THE NUMBER OF BUILDING PERMITS to a fraction of what they are.
>
>
> Building starts are down sharply, but there is still an oversupply
> of houses.
>
> THE SOONER THIS OVERSUPPLY IS RUN DOWN,
>
> THE SOONER THE HOUSE PRICE DECLINE WILL END.
It should show the percent of housing that can afford the price that was paid for the house.
Until housing prices recede to an affordable level there will still be a downward trend in 'value'.
In most areas of the US, prices are much higher than the local economy can afford.
The following has been published before: There was no need to make a
fraudulent application to the bank to get a loan to buy a house. The bank, with no help from the applicant house buyer, prepared the fraudulent loan docs. If anyone were serious about bringing the criminals to justice, the procedure needed to put them in jail is stunningly simple.
Advertise for applicants who refused to sign the fraudulent loan docs prepared by the banks. Hopefully they kept copies of the phony papers.
Offer ample financial rewards for whistle blowers that worked at the banks. Immunity from prosecution is, of course, a must. The best source
of evidence is the ambulatory notary who worked for several banks. If he/she kept copies of the fraudulent bank prepared docs we will have to build more jails to house all the guilty parties.
The banks at the retail Countrywide level were being offered ample
rewards to supply product to the investment banks to slice and dice. This
phony paper was sold throughout the world for huge fees. The role of our
Treasury Secretary between Jan.2006 and June 2006 should be investigated. As chief honcho
he had to have approved the role of his two 10 million dollar bonus babies. These worthies operated under a restricted budget. To do what
they accomplished(shorting the WaMus & Wachovias of this world) and
making billions for their firm had to have approval from the CEO of the firm where they worked because they needed a whole lot more cash to operate than what was allotted to them.
And let's , please, not forget other major players in this fiasco: the real
estate brokers. The brokers had lists of "buyers" that they used to "flip"
the properties. These "buyers" were paid a fee for lending their name.
A broker of my acquaintance was paid $8,000.00 per package by the
banks for whom he worked. He astutely shared this wealth with his buyers. Add in sales commissions and other fees received for processing
the "sale" of the property, times the number of times in one year that the
property was "flipped", and you will quickly get the idea of the incentive
propelling the fraud train. Plus, please do not forget, Harry Reid and Barney Frank, et al, urging all parties to make home buying for the
underpriviledged a priority to allow them to share in the American Dream.
That the Dream is now a nightmare is not really a problem. Just throw
more funny money at it and everything will turn out all right.
On Nov 12 07:19 AM Useral7899 wrote:
> The people that got the loans, based upon farlse information, are
> also fraudulant. How many have been prosecuted since this began?
> These are the same people that are seeking a bailout.
> What are we teaching our kids? Fraud pays !
Says you. Banks need cashflow like any other business. I find it doubtful that they can hope to restructure so many loans without starving for cash. As Jolly_Rancher said, anyway you want to slice it, a lot of the banks are dead men walking. Restructuring only changes rate at which they bleed out.
I agree that many defaulters are going to stay in "their" homes if only because there will be nobody from the bank/sheriff etc. to kick them out. But they will be reduced to being de facto squatters with no ability to show clear title or borrow against the property. Just like a lot of third world countries. Good job America!
Why should we be artificially propping up the price of housing? The price needs to revert to the historical trend of 2.5 times household earnings. To prop up prices will only prolong the mortgage crisis, which is occurring in part because people fundamentally can't afford the cost of homes. It would also increase housing costs for home buyers, freezing the market. Sorry, E Thomas, but residential construction jobs are gone for a long time anyway due to oversupply.
If I owned mortgages, I would be on the phone, offering to write down the amount of the loan to 2003 price and payment levels. That would keep the tenents/owners in place and prevent me from having to forclose at a cost of $100k per house. Heck, just reduce the loan by $50k. That would allow the owners to sell the house or stay in it and I would be out $50k instead of $100k.
Ironically, the banks who own mortgages cannot put any losses like this on their books, even if it saved them money. Doing so might result in them being cut off from liquidity. So the spiral continues.
On Nov 12 12:12 PM jimmy46 wrote:
> No one has suggested this, BUT:
>
> Local governments across america need to
>
> CUT THE NUMBER OF BUILDING PERMITS to a fraction of what they are.
>
>
> Building starts are down sharply, but there is still an oversupply
> of houses.
>
> THE SOONER THIS OVERSUPPLY IS RUN DOWN,
>
> THE SOONER THE HOUSE PRICE DECLINE WILL END.
If Americans cannot earn decent wages, where are we? Not everyone has the ability or education to invent or work behind a desk.
On Nov 12 05:39 PM E Thomas St wrote:
> Say goodbye to construction jobs. Say hello to higher unemployment.
>
On Nov 12 02:55 PM Flash Gordon wrote:
> I have two issues with this article:
>
> 1) one third of the people in the u.s. own their houses free and
> clear. I'm not sure what the geographic distribution of these free
> and clear owners are but I have read this in many places.
>
> 2) most prices are still above where there were in 2003-2004. Could
> 30% of the homes turned over or been refinanced to close to assessed
> value in the time since 2003/2004?
The baby boom generation lost 40-50 % of their " retirement funds " in the market cash of 2000-2001 .Now , they have lost 40-70 % of their portfolios for a 2nd time . Add to this , losing 30-40 % of their home equity , depending on location .Lots of them are now being dismissed from their jobs . This will truely be worse than the great depression . All of the boomers I know , myself included , grew up modestly , worked their way thru college + worked very hard thru out life . When you have 78-80 million folks hit multiple times during their lives , I personally can't think of a way most of them will be able to survive . I feel for the younger folks coming up now as their futures are not bright . Their employment options aren't going to be great given the effect " globalization + outsourcesing ' of US jobs has had on the US job market. I have told my own sister that " she ought to consider moving to the middle east or Hong Kong ".What are they supposed to do ? A very good question /concern.
I would hope that you would add:
Barney Frank and Chris Dodd for endorsing high loan to value and other practises in Fannie and freddie therefore giving the market par to shoot for. Who was the major purchaser of Country Wide loans? Hmmm.
I wonder
Home loans for all ~ ~ ~
keep the practise going!
www.nytimes.com/2008/1...
Keep in mind the percentage is calculated as: number of homes with mortgages with negative equity/number of homeowners with mortgages.
For example there are approx. 11 million people in Ohio. The number of households in Ohio is 4.4 million, the homeownership rate is 69.1%. Those the number of homes in Ohio is approx. 3.2 million.. This is from
quickfacts.census.gov/...
The chart for Ohio says 419,000 homes with negative equity, also given is the 22% with negative equity. Using all homeowners the percent of negative equity is 420,000/3,200,000 = 13.125%, which makes sense since a lot of homeowners (between one third and one half) have no mortgage.
On Nov 12 07:19 AM Useral7899 wrote:
> The people that got the loans, based upon farlse information, are
> also fraudulant. How many have been prosecuted since this began?
> These are the same people that are seeking a bailout.
> What are we teaching our kids? Fraud pays !
This situation could become very scary.
I think we will see more and more large scale fires like california. It was quite common in the Bronx in the seventies to set building in fire to collect insurances.
My grand parents told me about a house they bought in 1930 for about 250 $ for unpaid taxes, It was built in 1928....and costed 28 000 $.
Where are we going ?
Strong inflation could be only way to get out this mess. But anyway it goes it will be painfull.
Gilbert .:
This situation could become very scary.
I think we will see more and more large scale fires like california. It was quite common in the Bronx in the seventies to set building in fire to collect insurances.
My grand parents told me about a house they bought in 1930 for about 250 $ for unpaid taxes, It was built in 1928....and costed 28 000 $.
Where are we going ?
Strong inflation could be only way to get out this mess. But anyway it goes it will be painfull.
Gilbert .:
On Nov 14 02:00 AM Lin wrote:
> Jolly-Rancher
>
> The baby boom generation lost 40-50 % of their " retirement funds
> " in the market cash of 2000-2001 .Now , they have lost 40-70 %
> of their portfolios for a 2nd time . Add to this , losing 30-40 %
> of their home equity , depending on location .Lots of them are now
> being dismissed from their jobs . This will truely be worse than
> the great depression . All of the boomers I know , myself included
> , grew up modestly , worked their way thru college + worked very
> hard thru out life . When you have 78-80 million folks hit multiple
> times during their lives , I personally can't think of a way most
> of them will be able to survive . I feel for the younger folks coming
> up now as their futures are not bright . Their employment options
> aren't going to be great given the effect " globalization + outsourcesing
> ' of US jobs has had on the US job market. I have told my own sister
> that " she ought to consider moving to the middle east or Hong Kong
> ".What are they supposed to do ? A very good question /concern.