In the U.S., consumers owe over 11 TRILLION dollars in 1 - 4 family home mortgage debt and 2.6 Trillion in other consumer credit debt... for a total of around 14 Trillion. One Trillion (ONE) is $1 per second for 32,000 years... without interest! Noodle that one for a minute.
People are screaming about the Fed Gov’t owing 12 Trillion... at least the gov’t can tax and they have a printing press... consumers owe MORE than the Fed Gov’t and many consumers have lost their only source of income... a job!
Subprime was simply the first link to break in an extraordinarily over-stretched chain of debt. Alt-A Option ARM loans are now defaulting at the same rate or at an even higher rate than subprime... Prime loans are not far behind... we’ve only seen the tip of the iceberg in prime foreclosures.
ANY loan that was taken out when the market was grossly over-valued was a bad loan. If a “prime” borrower with perfect credit, full income documentation and a 20% down payment bought a house or a commercial building that was 40% over-priced, then that TOO was a bad loan.
Americans took out and spent HUNDREDS OF BILLIONS of dollars in home equity loans from 2000 - 2007. They spent it on clothes, cars, boats, RV’s, 2nd homes, nannies, private schools, fine wine, fabulous vacations, etc.
That home-ATM has been cut off... which is playing a huge part in unemployment and those debt-fueled jobs are not coming back any time soon and higher taxes, Obamacare, Cap and Trade and Card Check will only make unemployment worse!!
Home prices are going to continue to decline until supply meets demand, meets a price that the average person can afford, meets a consumer who can qualify for a loan under new, much stricter mortgage guidelines.
There is not a mortgage modification scheme known to man that can stop millions and millions of additional foreclosures from happening.
I agree. It’ll be worse on the coasts, as usual. The Midwest homes hold their value pretty well. I’ve flipped five homes here in WI to eventually buy my farm and always made $30K & more on each flip.
My little farm is still gaining value, but at a slower pace than it used to. Been here 15 years already...we’re digging in and we’re not leaving unless it’s feet first.
By the time we have it paid off, it will finally be worth what it’s REALLY worth, LOL! ;)