Timothy Barrett

More Than 1 in 5 U.S. 'Homeowners' Actually Own Nothing

This isn't Facebook. If you guys are trolling for hook ups, take it elsewhere. Jimmy K should be treated with respect.


On May 07 05:19 PM Jimmy K wrote:

> sorry boys, I am a girl... and i am into girls...

More Than 1 in 5 U.S. 'Homeowners' Actually Own Nothing

I love my home of 22 years. I paid it off nine years ago when the stock market was high (it was just coincidence that I avoided the tech slump) because I wanted to eliminate debt to start a new career.
Some people have advised that one should retain less than 50% equity in the home because 1) you already own any appreciation, and 2) the after-tax margin between your mortgage rate and the total return in your chosen market investment typically favors the investment.
But this equation is upside down today even with historically low mortgage rates. A balanced portfolio may well yield 2-3% in dividend/income and average 5-6% annual appreciation in the coming years, but so much wealth has disappeared that an 8% total return on most portfolios won't cover a larger 6% mortgage. That only worked when the debt and the porfolio were fairly equal.
In the last 30 years, people homes have become not just their largest investment, but typically the only one. That is extremely difficult to walk away from. Also, the working class is made up of workers. They are proud of their years of employment and don't squat in other peoples houses, they buy their own.
I don't sympathize with homeowners who bought $400,000+ homes on $100,000 family income and now can't make the payments. I sympathize with the homeowners who owe $125,000 on homes they bought 25 years ago for $60,000 and have had to borrow for capital improvements, maintenance and even livign expenses because their stagnant $40,000-$60,000 family income stopped paying their bills ten years ago. And they get ridiculed because, with their deductions (including the mortgage interest deduction) they pay no federal income taxes. Even though they pay payroll, excise, sales and property taxes that add up to a higher percentage of pay than I do.

While the Goldman Sachs alum bail out their cronies and Congress favors investors much more than wage earners, where is the bail out for these people?

It's Time Banks Broke Up and Moved On

I would agree with you, but what about the defaulting commercial loan and resident loans securitized in these banks portfolios? PNC is getting ass-kicked because it didn't have time to peform adequate due diligence in the NCC purchase and the books are worse than anticipated. It's just too easy for these banks to hide their terrible portfolios, especially since they get to value them anyway they want. Something must be done to protect the mortgage holders. A moratorium on foreclosure and judicial power to reduce the debt level would settle the economy and allow banks to properly value their loans. The other shoe has still to drop on the commercial debt losses.