Nearly half of U.S. mortgages seen underwater by 2011

MarketWatch ^ | August 6, 2009 | John Spence

[Stayfree]

An estimated 25 million homeowners, or 48% of those with mortgages, will owe more on the loan than the house is worth by the first quarter of 2011, according to an analysis by Deutsche Bank released this week.

[Stayfree]

EVERYONE WHO SAYS THE RECESSION IS ALMOST OVER IS EITHER LYING THROUGH THEIR TEETH OR JUST PLAIN OLD STUPID!!!

[BGHater]

‘25 million homeowners, or 48% of those with mortgages, ‘

Homeowners = Have Mortgages? Lol.

Gotta love the twisting of words and reporting. If you ‘own’ a home, you wouldn't need a mortgage.

[zek157]

Wow!

They projected that 41% of prime conforming borrowers and 46% of prime jumbo borrowers will be underwater by the first quarter of 2011. “The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding,” Deutsche Bank said.

We receive propaganda, not news in the MSM.

[silverleaf]

question is- how many folks will have the income- and the integrity - to keep paying hefty mortgage on a deflating asset? Lots of post-boomers seem to think they are justified to walk away if the house isn't appreciating

[WOBBLY BOB]

U.S. Considers Remaking Mortgage Giants, Fannie Mae & Freddy Mac

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/05/AR2009080504063.html
The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said....
more at washingtonpost.com ...

[Michel12]

When I bought my house, I gave a 30% deposit. I also paid it in 10 years instead of 30.

I would never have thought to buy without a huge down payment, which I first saved.

Guess what: I have no mortgage and I really do not care how much my house is worth because I live in it.

But I bought it only after 11 years of marriage and a lot of saving.

[taxcontrol]

This is not significant. Mortgages that are “under water” or upside down are not as critical as:

Percent or number of:
- mortgages that continue to be paid on time
- mortgages in arrears
- foreclosures

This is very much like saying “Nearly half of US homes have a roof that will be 15 years old in 2011”. Perhaps a factual detail but it does not allow us to observer cause and effect in the market. It only allows speculation and FUD.

And to that end, becomes an “anyman” tool to argue for any kind of action or inaction. For example, a dim could argue for the need for another TARP bailout. A republican might argue that it is evidence the TARP bailout is not working.

[KeyLargo]

Better add a thousands of auto loans in default to lienholders when the owners soon become upside down in their new auto loan payments due to Obama’s cash for clunkers program enticing and encouraging people to incur more debt from purchasing cars that they cannot afford.

[KeyLargo]

Looks like you are one more sucker that is paying for others choice to live way beyond their means.

[Bean Counter]

The only “solution” that is being pushed right now is attempting to put some of these people into FHA backed loans that are going for around 5.25%, for now.

The catch is that there are enough people who are in dire financial straits that they do not qualify for even an FHA loan. The interest rate increases as the credit scores go down, and because property values have been slashed across the board, even the tax value on many properties is way overstated.

If you try to qualify and re-finance right now, you may get a lower interest rate, but you will also pay one year’s worth of FHA Mortgage Insurance up front, and depending on the size of your loan, an additional non-deductible mortgage insurance premium along with your monthly mortgage and escrow payment.

In addition, most borrowers who need this the most do not qualify for the lower interest rate, so they are given the “option” of “buying down” the interest rate by paying enormous bank fees and/or “points” up front. If you roll those fees into your current loan, it could easily wipe out several year’s worth of additional acquired equity in your home, and increasing the length of time you will be stuck with those insurance premiums. The only way to get rid of the Insurance is to retain in excess of 22% equity in your home, and even then you may well have to re-finance your house all over again to get rid of it.

The Administration and the Democrats are out bragging about how much help they are giving to Americans who are losing their homes, but it is stories like this one that bare that outrageous Obama lie for those who still have eyes to see...

[verity]

“...an analysis by Deutsche Bank released this week.”

OK!

[Buckeye McFrog]

wow....there must be a awful lot of soiled underwear in Beijing this morning...

[jnsun]

The United States is bankrupt; financially, politically, and morally, thanks to the LEFT.

Our advice, protect yourself against inflation like you've never seen. ("They" can try to hide it, but in the long run cannot.)

The Suntrade Institute

[listenhillary]

Won’t we be paying them back with inflated dollars? Not the expert, just asking.

[zek157]

I’m afraid many will walk instead of continuing payments.

Here’s another green shoot for the overall economy.

WASHINGTON (Reuters) - For the first time, more than 34 million Americans received food stamps, which help poor people buy groceries, government figures said on Thursday, a sign of the longest and one of the deepest recessions since the Great Depression

Enrollment surged by 2 percent to reach a record 34.4 million people, or one in nine Americans, in May, the latest month for which figures are available.

[zek157]

Bean,

Since these are Prime notes I suspect most of the notes have fairly good rates already? Rates between 2004-2006 were in the 5 3/8 - 6% range most of the time? 5 1/4 wouldn’t have much impact?

[Timocrat]

The interest rate increases as the credit scores go down, and because property values have been slashed across the board, even the tax value on many properties is way overstated.

This is the next big problem that's coming down the pike. When people get their property tax assessments and realize that the assessment is greater than the market value of their homes they will appeal the assessment - if they have any sense - and the revenues to city and counties, which have gotten fat,dumb and happy, on the back of the property boom will start to disappear. And it's not just the property owners with mortgages it will be every home owner.

[Notary Sojac]

Lots of post-boomers seem to think they are justified to walk away if the house isn't appreciating

As compared to the banks, who think they are justified in raiding the Treasury if their assets aren't appreciating? Sauce for the gander, says I.

[Stayfree]

and loans on motorcycles, trailers, rv’s, boats, trailers, atv’s, jetskis, etc.

[azcap]

This is not significant. Mortgages that are “under water” or upside down are not as critical as:
Percent or number of:
- mortgages that continue to be paid on time
- mortgages in arrears
- foreclosures

Although the things that you list are certainly worse, upside down mortgages are very significant. The problem that we have with 50% of mortgages being upside down is that it makes the workforce inflexible. People cannot move to get a new or better job. The economy is still shedding jobs like leaves in October and a lot of good people who put their 20% down and pay their bills on time have and will lose their jobs. They are then stuck in the regional job market where they are because they cannot afford to sell their home. It is particularly bad in the dozen or so states where home values are down 20-40%.  There are parts of the country where the economy is quite strong. It would behoove an unemployed person with ambition to pack up his family and move there. Being saddled with $100K in upside downedness puts a quick end to that thought.