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Homes Under Water: Looks Like a Long Slog for Homebuilders

[2, Government Resolution Trust will purchase these homes from these institutions for 20% less than original first Mortgage amount]

Not NEARLY enough of a discount.

For many of these loans, that's at or above current market value.

It's time to stop the proposals that require the government to overpay for "assets."

There's plenty of private capital that would buy this toxic crud, if only it were offered at the right price.

When the banks/investors rise out of denial, then this can be resolved.

Homes Under Water: Looks Like a Long Slog for Homebuilders

[Saved by loan modification efforts from losing their home, they may still remain substantially under water from an equity standpoint.]

It's not just those who were saved by loan mods. At some point, mortgage investors are going to have to address this, allowing homeowners to sell short without getting a deficiency judgment. Else, you cripple the economy by limiting workforce mobility.

They're as much in denial as homeowners facing foreclosure on this issue.

[Add to that shadow inventory the inventory of owners who would like to sell but have put off the process until the market stabilizes, and you have the ingredients for a rather long period of market stagnation.]

There's also the backlog of homes created due to the foreclosure moratoriums, as well as the properties that lenders have delayed foreclosure actions on.

But you're forgetting the massive stimulus bill, which is going to fix everything.

Mortgage Delinquencies Continue to Climb, Watch Out for Other Loans

[they were sold to consumers who did not understand them by Loan Officers who did not understand them coupled with lenders who allowed people to be qualified by the start rate not the fully indexed rate.]

While it may be true that borrowers did not understand them, they really didn't take the time to do so, nor did they ask many questions beyond, "What's my monthly payment going to be?"

Even without understanding the terms, nearly all borrowers knew that they were going to have to refinance before these things exploded.

Many were also told that they would have to do some clean-up on their credit in the meantime... but how many did?