Skip to comments.Most homeowners still faring well, with positive equity
Posted on 10/02/2011 9:03:41 PM PDT by Borough Park
By Kenneth R. Harney
October 2, 2011
Reporting from Washington
Negative equity and underwater homeowners are frequently in the headlines, but what about positive equity in Americans' homes?
Is there much of it left after the wealth-killing recession and real estate bust? Where is it? Who's got equity? You might be surprised.
A new study, conducted by mortgage and real estate data firm CoreLogic for this column, found that there are substantial reserves of positive equity across the country. CoreLogic maintains the largest database on home loans 42 million active accounts, more than 80% of all existing mortgages with information supplied regularly by lenders and servicers.
First some basics on equity. The Federal Reserve estimates that at the end of June, Americans held $6.2 trillion in equity in their homes. This was down sharply from $13.2 trillion in 2005. Roughly 1 of every 3 homes is mortgage-free, according to federal and industry estimates.
Among owners who have mortgages, according to CoreLogic, 48.5% have at least 25% equity stakes in their properties. Roughly a quarter of owners with mortgages 24.6% have more than 50% equity.
At the other end of the spectrum, 22.5% of owners are in negative equity positions, burdened with houses worth less than their mortgage balances.
(Excerpt) Read more at latimes.com ...
Well this is obviously unfair. The positive equity should be shifted to the “homeowners” who are underwater. < / sarcasm>
LOL...too late...they already did that under TARP...
I found out the hard way...when I refinanced...
Freddie somehow ended up with my note....and was kind enough to cut my stated home value in HALF...which placed me severly underwater (as a statistic)..
I had to “cram up” my value through a second appraisal..
Luckily...my home value was really well over what I actually owe....so I was able to inturn knock of a couple intrest points and two years of payments...
I was one of the three or four people who took advatage of the making home affordable program and suceeded.
But the goal here is clear...to strip the middle class of the wealth they have in their properties by making them nearly worthless...
“Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution.”
Our home is still underwater. Dropped another 24K this year. Thankfully we are not planning on selling.
I strongly doubt the accuracy of this statement. Best guess, the number is likely closer to 40%, as a home's true value is what a buyer is willing to pay.
Read the housing bubble threads going back for the last six or eight years. Freepers have been explaining what was going to happen because of the oversupply the US was building. Now we are there.
My house is also underwater by at least 50K. I am seriously thinking of letting them have it. It will not rebound in price for at least 10 years, and I will never pay it off. The way they are bailing out banks, things look very bleak. There is a plan to make the US govt the owner of the property of all but the elite. We will then be tenants, completely at the mercy of this “beast”. Thinking of a severe downsizing, and save save save.
If we would have kept the original mortgage we would have been fine. Where we got in trouble was a refi done in 2005 combined with a 40K second.
“Freddy did not cut your home value in half.
It just is no longer tenable to lie about actual real estate values.”
Right...cuz you saw the paperwork...the apparaisal...and my note...
I obviously imagined the agent show me the stats, and faked my outrage that 42k of stated value just up and dissappeared...
And I must have somehow faked the reappraisal to get the stated value back up high enough to qualify...
The house next door selling for a 199k must have also been a figment of my imagination...
Gee...I have a very active imagination...
I know what happened...Under TARP freddie and fannie were allowed to “reassign value” all of it’s notes.....
Take good notes like mine with value...and take some of that value and apply it to worthless notes....to bouy up their mortgage back securities...
It was a scam...not rocket science...
This is like saying “most Jews escaped the Holocaust.”
No refinance, just the reality of a house I paid 50K too much for. People talk about the sanctity of signing a contract, and keeping your word. That carries O weight with me, as the people that caused this to happen, live the high life, while the peons sink into slavery. The slavery of debt, everlasting debt. This nation is a cesspool of corruption, and it will never come out of it unless enough citizens drop to their knees, and give their lives to God. The very financial system our country is built upon, is Satanic. The people must come out, or die with it....It is that simple.
My answer is, SO WHAT. What did you buy the house for? Did you really buy a house with the idea that they ALWAYS go up in value? Well they don't! Real Estate historically increases in value over time but at any specific time period it can be up or down. If you do not understand this then you should probably stick to renting.
Can anyone here describe what happens when you buy that 40k new SUV and drive it off the lot? You guessed it. You are under water big time but does that notion prompt these same people to just throw up their hands and say I'm letting go back to the bank?
So these people that think they should just let the bank have it are being completely irresponsible. In my opinion anyone who can make the payments on a home they bought but lets it go back to the bank because its decreased in value should never be given a home loan again. If I'm a lender and see this type of activity you are out of there. No loan under any terms, period.
Lastly, what if we get rid of obama and in a few years home prices skyrocket. How would you like it if the bank called you up and said hey this home we loaned you money on is now worth a crap load more money. We are increasing your payments and the amount you owe us to reflect the original loan to value ratio. How does that sound?
Final point. Just because your home is down 50k now does NOT mean it won't be 50k up in ten years. If you bought the home to live in and you could afford it just live your life and stick it out. That's the way Real Estate go.
I am sure that will make those who aren’t feel much better. /s
It’s the 22.5% that have a negative equity that is bringing down the entire market. They is simply way too much supply for the demand. the real estate bubble has burst and as long as the government stays involved in real estate financing, the true market price will be too high.
Heh. No sale, but thanks for the laugh.
“. The slavery of debt, everlasting debt. “
No one forced people to buy huge cars, huge homes, that they couldn’t pay off right away, or at all near the time that they purchased them. No one forced anyone to go on vacations that they couldn’t afford and forced them to max out the cards on designer clothes. There’s a reason that Thailand and a lot of ‘third world’ countries aren’t doing to bad, mainly that the average citizen, no matter how dirt poor, at the very least aren’t up to their eyeballs in unneeded debt.
“Can anyone here describe what happens when you buy that 40k new SUV and drive it off the lot?”
They are idiots to pay that much for a car in the first place.
It is a little easier to pull that stunt in non recourse states, but it still has credit rating consequences. If someone has a stellar credit rating, it is probably not worth nuking it for $50K.
I had the opposite experience. My loan was underwater and owned by Citi. As a stealth part of the bank bailout, Freddie bought my loan from Citi. Citi was the servicer and immediately turned around and sent me a refi offer. I applied, expecting nothing. When the numbers came in, I had 1k equity (owed 240 so essentially zero). Citi told me that Freddie had a special deal for me, relaxed rules for equity. So I got my 4.5 loan on no equity, no PMI, no other hooks or gotchas, which I’ve been paying for two years now. Just got another letter for 3.5, looks like Citi wants to keep churning the loan
One of the big reasons I've been able to pay down my mortgage as much and as fast as I have is that I haven't been burdened with a $500-$800 monthly car payment.
That "people who caused this to happen" would be you, among others. I paid 150k "too much", but I knew that prices were plunging at the time and factored that in (put down 25%, paid down principle, not just interest). Had you bought on the upswing of the market, and your house was worth 100k more than you paid, and they came by and said "oops we made a mistake in the contract" you would be talking only about the sanctity of the contract.
The system does have an out, you can "sell" the property at a loss. You can let the bank or mortgage lender have the property back, and do what is legally your right. At this time, you are not jailed for doing this, and it is part of the contract too. Of course you will have trouble finding a job, because employers are now using credit reports to hire. It is even difficult to get a job, if you are unemployed....what a system Huh?
I actually bought a two bedroom, one bath with no garage. At what seemed a reasonable price. I then added a bathroom out of pocket, remodeled the kitchen, added a deck, a workshop, a craft room, upgraded windows, insulation, new furnace, hardwood floors and remodeled the bath. I did this all with cash, to increase the value. I still am 50K below payoff on this house, with no chance of paying it off, no chance that it will ever be worth what I owe, in my working lifetime. How many others are in a position where they will forever be in a position of poverty? Not because of wasted earnings, but from chasing the dream of living independently of the need to “earn” more “money”? When I can no longer work, the system will then “take care” of me, and those like me. Of course with “money” taken from unborn citizens, that also will never be free of the need to produce, purchase, and be forever in debt. Conversely, the “bank” will not lose a dime, actually making a profit “NO MATTER WHAT HAPPENS” we all lose, “NO MATTER WHAT HAPPENS”. This is because the system is rigged to enslave, not empower. The 5% that actually earn enough to step outside this system, then call the 95%, unwise, profligate, bums, and freeloaders.
You really didn't mean to write that did you? A "house" has no real value no matter how shiny the new floors are, only what a fickle market may want to pay for a roof over their heads, shiny hardwood or not. The problem seems to be that you got caught up in the flawed thinking of the early to mid 2000's that "putting money into a house" added to its value. There are a few exxceptions that have a calculated payoff. Did you calculate the payoff of the windows, or just put them in?
Just think about how much more “stuff” we have today, compared with 50-60 years ago.
Most people didn’t even have a car....television was still a new technology, so most people still just had a radio. Basically people had their home, furniture, clothes and some basic appliances, and that was it.
OH NO! Being a good caretaker of property, to keep it and make it current is a bad thing? I didn’t do it to make it nicer to sell, but to improve its value to me. Of course adding a room or two, also should improve value, as a 3 bedroom sells for more than a two bedroom. The money was nothing, but investment in the hope fueled by the system in place that we live under. The labor was all mine, the products purchase and paid for with my earnings. If that isn’t what can improve value, what does? A “money bubble”, more buyers fueled by confidence that things will improve? Actually, the estimated value for the house went as high as 40K over purchase price, before the bubble popped. Now similar houses are sitting empty, selling for as little as $100K. Of course most are not for sale, as the banks are allowed to count them as assets at inflated value, while borrowing still more money to remain “solvent”. Currently not needing to liquify their holdings, further driving down prices, or writing off a percentage to current borrowers. The game is surely rigged to enslave. Human beings are capital, when they no longer represent a profitable possibility, they are discarded. A new feudal system, where the caretaker is replaced by a younger man, who can “pay to play” the rigged game. All this, and the Federal Govt, an entity created by the states, absorbs more and more property into its portfolio. Soon, the Federal govt will rent homes to people, controlling a huge percentage of all land.
Keeping up with the Joneses or whatever you want to call it is a great way to spend oneself into poverty. You rationalized that you were "investing" in your property. You were wrong. Even you had done it 10 years earlier and sold at the peak you would still be wrong. It was not investment, it was a bubble and shiny floors can sometimes pay off in a bubble. But they are not an investment, they are consumption.
A house is strictly consumption. The fancier and more "current" yours is, the more you have consumed. What you spent money on is no differnt than my recent purchase of some music gear. Sure, I could rationalize like you and say "being a good musician is a worthwhile hobby and could lead to a new career" but it would be false and not even as false as your house-based consumption.
Let me ask you one more question if you don't mind. How much work did you actually do yourself?
I did all the work, except for help placing a beam and screwing cabinets in...my son in law helped. About 8 hours maybe total. I could have installed the cabinets myself, but he was staying here with family, and had free time.
Nice try on the positive spin.
Equity or not, there’s some 25%+ homes in peril of foreclosure.
Of course, this doesn’t take into consideration the shadow inventory that is hidden, not on the market, but on the banks balance sheets.
The true value of most homes is vastly lower than Zillow or anybody else knows. At least five years worth of inventory is not on the market.
The FED CASUSED and ALLOWED this housing bubble, and the FED is a slaver, causing slavery of American citizens.
The rest who think they are “responsible” will mock those who through no real fault of their own, are now having trouble. What they don’t realize is that same trouble is being hidden from them, while they mock others.
This is bigger than the few who were at the edge and were first to fall. They are planning this for the rest of us.
They plan to OWN us. I didn’t see that on MY contract.
Ok, then I take back what I said. You put nontrivial sweat equity into your place and lost it, and not through your fault. It’s also true that the system is rigged against you, if you happen upon a desirable property (especially a good location) and make it more desirable, then someone will try to take it from you. But in your case you want to walk away which is not as typical. How long had you originally planned to stay in your area?
I just want to understand your post.
Our loan was “given” to Fannie, though a bank we had not financed with, in 2010. It was truly bizarre.
So, when you tried to refinance, Freddie cut your homes value in half? Were you going though Freddie?
I have been on a campaign with hubby to get refinanced but with the local credit union.
Anything you wish to share on an open forum, I would appreciate.
I have lived within 7 miles for 55 years...within a brisk 4 mile walk to where my mother and father lived and died. I have a small business in this country also. I would not contemplate this move, except I am flush with cash...enough to start over, or keep paying payments and hope that in six months I have made enough to continue on another six months. I have gone from profits of near 100K in 2007, to 15K net last year. This year is better, but only because I worked mostly alone, eschewing employees, to afford insurance, and just bills in general. I am a painting contractor, and have been sprinkling in handyman and housecleaning into my repertoire. I currently have enough money saved to pay bills for six months, with no bids or contracts ahead. I am waiting on calls, literally hanging in the wind hoping for work. So far, it hasn’t failed me, but what a place to be. In the early spring, if work does not pick up, I will be in the same position, with the money gone. It is a call that I should make, but I love my house. I have a 795 credit score on the high end, 780 low. No equity, low income to debt ration, means I cannot refinance. I owe zero to credit cards, and about 500 to doctor bills. I am living very close to the vest, and this economy is going to put me in the homeless class. I am actually thinking about buying a motorhome, placing it on leased land, and working out of a storage unit. I can save at least $2K a month for a new start, but ......... who wants to give up what they love?
Basiclly freddie assigned a value about 50% lower than my previous appraisal that was just a few years ago...
This placed me severely under water on paper...and thus I wouldnt qualify for the refi...
I expected that I had lost value...everyone has.....but 50%?...no frickin way...
I had to get an independent appraisal in order to prove that my actual market value was nearly double the value that freddie had assigned...
Since I owe much less than 80% of the “current” market value....the loan was then just a matter of a few phone calls and a closing...
But then I started wondering...where the hell did that 43k of previous value go?
Well...Under TARP...freddie and fanny where allowed to re assign value to their “troubled assets”...aka ...subprimes...aka...bad worthless notes..
To do so.....they calculated the previous value of all assets vs the current value....then re assign all notes a new “current value based on how much money the pile of notes lost...
This gave value to the worthless notes....while degrading good notes....most times...without the home owners knowledge....
I would have never known had I not tried to refi...
In my case...my intrest dropped from 7.5 to 4.8....I knocked two years of payments off by going to a 20 year note...and my house payment dropped about 120 bucks a month...
For me it was a win...
I would definatly go with a credit union over a bank....you can get much better service and sometimes a credit union will help you out in personal ways no bank ever can or will...
( I once had a bad check passed to me....and my credit union covered my account until the matter was settled rather than bounce all the checks I had written)
The note on my rental is through Chase...
I have never had a problem with the service from either bank concerning the house accounts...and all my checking and consumer loans (credit cards ,auto, etc ) go through my credit union... I'm not a mortgage expert by any means...just an Electrician...so exercise due diligence.... My understanding is that with a good payment history and a decent credit score most places are still loaning money....and it's worth it if you can drop your payment AND the shorten term of the note at the same time... I figure I saved about 60k in intrest over the life of the current note vs the previous note... Hope this helps...
Thank you so much.
I really don’t like Fannie “owning” our loan, and I hope to get refied soon.
Now I have one more reason that “letting” Fannie own our loan is not good.
Lord knows what else us serfs don’t know and will slowly leak out.