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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.

Click  to enlarge

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:

  •  
    When will they bring charges against Country Wide for Over Valuing the homes to make the loans look good on paper. Country Wide employed property appraisers to over value porperty. This is collusion !!!!!!

    Packing those loan that were a product of Collusion is FRAUD !!!
    2008 Nov 12 07:04 AM | Link | Reply
  •  
    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 !
    2008 Nov 12 07:19 AM | Link | Reply
  •  
    Interesting that the Banksters are painting themselves as so empathetic and compassionate when they're just looking out for their own best interest.
    2008 Nov 12 07:21 AM | Link | Reply
  •  
    doesnt look that the situation has a quick fix, oh well someday the supply and demand in the housing market will level out.
    2008 Nov 12 07:37 AM | Link | Reply
  •  
    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.

    2008 Nov 12 07:38 AM | Link | Reply
  •  
    The banks can't afford to take the loss either by foreclosure or modification. The losses are simply too great either way. Especially since the coming foreclosure due to Alt-a and prime and many foreclosures due to the deep economic crunch. It's going to be an avalanche that wipes out all of the bank equity and more. Get ready for the deep six.

    Jolly Rancher
    2008 Nov 12 08:06 AM | Link | Reply
  •  
    It takes a lot of money for a bank to foreclose on a house. Legal expenses, lost interest, repairs, expenses in putting the house back on the market, holding on to an empty house till it sells (insurance for a vacant home is nearly double/triple for that of an occupied home), time spent and so forth. Add to that the fact that the property is worth less than the mortgage... yes, it is in their best interest to modify the loan terms. Does a bank do anything out of the goodness of their heart? ;-)
    2008 Nov 12 08:21 AM | Link | Reply
  •  
    30% homeowners have negtive equity? So what? It does not mean that 30% of loans are diliquent. Property prices fluctuate all over the world all the time, but that does not result in bank failures.

    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.
    2008 Nov 12 08:38 AM | Link | Reply
  •  
    it is too late for many; we should establish a treasury backed 40 year fixed interest amortization guaranty pool (or seed it with a similar pool of govt. funds) as a "work-out platform" to re-fi all of those that are about to enter the foreclosure arena. this would help the banks balance sheets immediately and would actually provide them with more aggregate interest over the longer mortgage term, it would substantially decrease the monthly cash flow payments that the borrower needs to cough up every month and could actually create an augmentary (perhaps temporary) longer term segment of the bond market wherein government backed mortgage paper was the credit support mechanism.

    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
    2008 Nov 12 08:47 AM | Link | Reply
  •  
    Tell you a real money story:
    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.
    2008 Nov 12 09:06 AM | Link | Reply
  •  
    hey todd,

    where is that chart from? its truly ugly
    2008 Nov 12 09:22 AM | Link | Reply
  •  
    hey todd,

    that chart is ugly, where is it from?

    thx for the post
    2008 Nov 12 09:25 AM | Link | Reply
  •  
    All this run for the bail out money is getting out of hand. Some are changing their business charter to qualify wether they need the money or not. The Democrats now seem to be willing to throw the money at anyone that wants it. The same people that created the problem are getting the funds with no greater intelect to use it.

    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.
    2008 Nov 12 09:37 AM | Link | Reply
  •  
    I think everyone has it wrong. It's not a bailout. The regulators said these loans were good. I repeat, the regulators said these loans were good! The banks did not create ARMS out of thin air so when they started hitting the market the big banks bought them up as investments because they were told do so, as they always have, to free the banks from the debt burden so business can continue as usual.

    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!!!
    2008 Nov 12 10:29 AM | Link | Reply
  •  
    I saw this coming when I sold GPM loans.
    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.
    2008 Nov 12 10:43 AM | Link | Reply
  •  
    It is more than astonishing that the new heroes Barney Frank and Harry Reid were the ones in the last few years during Congressional hearings who told us that Freddie and Fannie were doing a great job; leave them alone. So what happened? These fools got elected again.
    2008 Nov 12 11:16 AM | Link | Reply
  •  
    Houses should not be short term (1-2) yr investments. Simply because your home is not worth what you paid for it last year, is no reason to walk away from your mortgage. This short term profitability mindset is not homeownership, this is speculation.
    2008 Nov 12 11:28 AM | Link | Reply
  •  
    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.
    2008 Nov 12 12:12 PM | Link | Reply
  •  
    Somebody said: "Simply because your home is not worth what you paid for it last year, is no reason to walk away from your mortgage."

    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.

    2008 Nov 12 12:49 PM | Link | Reply
  •  
    vbierschwale, the number of people over 65 is a lot smaller than the number 18-65. That's where your unemployment estimates have the largest error.
    2008 Nov 12 12:58 PM | Link | Reply
  •  
    cadoggy, I strongly disagree with you. What few in the media seem to grasp is that the problem is not so much that home values are dropping. Instead, it is that borrowers took out loans they could not repay UNLESS their gamble on their pricey house paid off -- and values continued to increase.

    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.
    2008 Nov 12 02:38 PM | Link | Reply
  •  
    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?
    2008 Nov 12 02:55 PM | Link | Reply
  •  
    What is even more frightening is that banks can't prevent people from losing their jobs. Which only adds to the burden of trying to negotiate new mortgage terms. The U.S. Government can provide all the incentives to lenders, investors, and borrowers it wants to provide, but until the tidal wave of dismissals is arrested by the Obama administration we won't see any improvement.

    In fact, if Dr, Martin Feldstein of Harvard is correct, we are still seeing simply the beginning of the housing crisis.
    2008 Nov 12 03:39 PM | Link | Reply
  •  
    I disagre, and as long as we think like that our country is in trouble.
    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 !
    2008 Nov 12 03:54 PM | Link | Reply
  •  
    So on a sample size of 33 self selecting people you're going to extrapolate (and poorly extrapolate) unemployment numbers for the entire country? Stay away from stats, you might get hurt.


    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.
    >
    2008 Nov 12 05:38 PM | Link | Reply
  •  
    Say goodbye to construction jobs. Say hello to higher unemployment.


    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.
    2008 Nov 12 05:39 PM | Link | Reply
  •  
    read how americans got duped into the 700 billion dollar scam at obhaven.blogspot.com!
    2008 Nov 12 09:26 PM | Link | Reply
  •  
    read how americans got duped into the 700 billion dollar scam at obhaven.blogspot.com!
    2008 Nov 12 09:26 PM | Link | Reply
  •  
    There should be a second map to compliment this one.
    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.
    2008 Nov 13 12:51 AM | Link | Reply
  •  

    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 !
    2008 Nov 13 01:37 AM | Link | Reply
  •  
    Anyone who bought a home after I'll say 1998 is most likley underwater when it comes to the value of the home. Realators and lenders with shady business dealings are to blame. Flippers also played a part in the false value increase. Homes are a long term investment until we get that mindset back you can expect further declines. Do your homework before buying a home make sure you do your own research and you can save yourself a lot of pain.
    2008 Nov 13 07:52 AM | Link | Reply
  •  
    "The losses the banks will take holding the real estate will far outpace whatever diminished losses they take on a reworked mortgage."

    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!
    2008 Nov 13 09:54 AM | Link | Reply
  •  
    jimmy46,

    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.
    2008 Nov 13 01:15 PM | Link | Reply
  •  
    Home purchases should be treated like any other investment; sometimes you win and sometimes you lose. Allow foreclosures to proceed and let the housing market correct itself.
    2008 Nov 13 02:17 PM | Link | Reply
  •  
    In California, where a large portion of the population lives, construction jobs are performed by Mexicans and other illegal laborers. Will anyone FINALLY (excuse the all-caps) talk about that???

    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.
    >
    2008 Nov 13 02:46 PM | Link | Reply
  •  
    It is true that 30% of homes are unencumbered by mortgage; however, the average age of the unencumbered homeowner is probably near retirement. With stock prices at multi-decade lows and interest paying nearly 0%, what are these people supposed to retire on? Most were probably depending on the sale of the home for retirement to a assisted living quarter. To sum up, a 30% home markdown hurts everyone, in real life, not just on paper.


    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?
    2008 Nov 13 09:11 PM | Link | Reply
  •  
    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.
    2008 Nov 14 02:00 AM | Link | Reply
  •  
    vbierschwale~

    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!
    2008 Nov 14 08:36 AM | Link | Reply
  •  
    I assume that the chart is from

    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.
    2008 Nov 14 10:31 AM | Link | Reply
  •  
    there are over 400 homes in small towns of IOWA that are in dis-repair and valued at only $20000 to $80000. What local banks would not load was loaned by FNM and FRE to someone with zero down and no capacity to even make a $300 per month payment! Now these houses sit empty and rotting.


    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 !
    2008 Nov 14 10:58 AM | Link | Reply
  •  

    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 .:



    2008 Nov 14 01:27 PM | Link | Reply
  •  

    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 .:



    2008 Nov 14 01:27 PM | Link | Reply
  •  
    How do I go about getting my mortgage principle lowered?
    2008 Nov 14 11:59 PM | Link | Reply
  •  
    Lin, Your post brings tears to my eyes. Very true and I have posted the very same on other message boards. I wish it weren't true. But we are in for a very tough road. The only thing that can save America is a sudden burst of efficiency (i.e. productivity) that boggles the mind. Where this would come from, I cannot see now. Maybe a sudden, easily implemented free form of power such as fusion. Remember, petroleum is about 3/8 of our trade deficit. Maybe, if consumers completely forsook the automobile for motocycles and small three wheelers. Automobile is about 3/8 of the trade deficit. The two together would begin to put this country on a better path. I know this sounds like pie-in-the-sky, but can someone tell me where the productivity improvements are going to come from to overcome our quickly sinking economy?

    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.
    2008 Nov 16 10:37 PM | Link | Reply