Posted on 01/30/2008 3:45:42 PM PST by Lorianne
Edited on 01/30/2008 3:49:56 PM PST by Admin Moderator. [history]
What could be worse than getting behind on mortgage payments? Owing your lender more than your home is worth.
That's what's happening to homeowners across the country, many of whom just a couple of years ago opted for interest-only or adjustable-rate mortgages. For them, just as their loans reset and interest rates rose, home values began to plummet, leaving them with negative equity; this is where their mortgage is greater than the value of their home.
Of course, some homeowners started off walking a shakier tightrope than others. Many subprime borrowers acquired piggyback mortgages, where a second mortgage covered the downpayment, leaving them with negative equity from the beginning. Indeed, 79% more U.S. homes entered foreclosure last year than in 2006, according to data from RealtyTrac, an Irvine, Calif.-based real estate research firm. Congress's Joint Economic Committee estimates that 2 million Americans will lose their home over the next two years, a figure in line with most research firms and rating agencies.
I'm thinking you're renting.
I'm thinking you're renting.There's a very simple test to determine ownership...
So houses have become like cars. They depreciate the moment you “drive” them off the lot.
You are correct.
But, I also point out that none of us, no one owns their home. We lease our homes and the lease amount is property taxes.
Don't pay your tax, you have broken the lease and they can take your home.
Pitiful.
Kings County, New York is also known as Brooklyn.
Sad but true.
The fact that one does not “own” real estate in that the State may take if for non payment of an arbitrarily determined tax makes us the equivalent of medieval serfs living on the Lord of the Manor’s property. There also was a similar systems under the Caliph in Islamic kingdoms. We may stay on it and live in his house as long as he permits it.
At one time in England, there were Freemen whose property belonged to them.
Alas, no more.
If the bank forecloses, what has he really lost? Sure, he has to move, but if you don’t pay your rent you get evicted.
Suppose I really wanted that penthouse in New York (I really don’t but just s’pose)for rent of $10,000 per month...if I don’t pay my rent do you think ANYONE really cares that I got thrown out?
Live within your means. Pay attention to what you are signing. Fifteen minutes with a pencil, a paper, a calculator, and an open mind can save much distress later.
Just before the dotcom bubble burst, there was a Japanese academic economist who came out with a paper then a laymen’s book about how homes had switched from being an asset to a liability in most developed nations. The guy did the English speaking talking head tv circuit and had a piece in the WSJ, but I simply can’t remember what his name was.
That guy was way ahead of the curve.
This happens with cars all the time. What is the big deal?
True, but cars depreciate a lot faster than homes. So you can drive it into the ground by the time you have to give it back it’s worth a lot less.
Still, you’re right, it’s the same deal.
Uhm, unless you own it outright, how is it your home? Actually, try not paying taxes and see if it is really your home.
“Stupid people lent stupid money to stupid people and I’m supposed to care....why?”
Sometimes I think our detractors are right about some of us. We are so full of hate and spite so often, and for no reason.
Who really cares what you think?
A car buying success around here is that the car is still running when the final payment is made. Many don’t get that far. :)
How the heck do you get negative equity? Isn’t equity based on how much you borrow minus how much you paid?
I think that’s a trendy way of saying you’re up the creek without a paddle.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.