Saturday, September 01, 2012
Never catch up
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Never catch up : Indybay
by indybay.org Sun Aug 26 11:47:03 PDT 2012
Nearly 9 million households now have upside-down mortgages, and for the first time ever, mortgage debt is bigger than the total value of homeowner equity cash invested bigger by $836 billion, according to research by MerrillÂ Lynch.
Half of Americans (50%) report that the value of their home is worth more than the amount they owe on their mortgage, up slightly from 47% last month. This finding slipped below 50% for the first time in June of last year and has ranged from 44% to 57% ever since. Thirty-nine percent (39%) say their home is not worth more than what they owe, down slightly from last monthâ€™s high of 42%
2.8 million Americans are 12 months or more behind on their mortgages. This truly amazing data point represents a very sad fact of the housing market. Once a homeowner falls that far behind in their mortgage, the odds are that they will never catch up. (Mortgage mods are likely to fail at an exceedingly high rate as well).
The housing problem set off the dominoes: Surging defaults meant the mortgage-backed securities plunged in value. All these investments, of course, were highly risky. Higher returns on investments almost always come with greater risk. Credit has become the drug of choice of the modern world, far more widespread than any other. Individuals, companies and governments must have their fix of it, for they are addicted to it, and the withdrawal symptoms are too painful to endure. Like many drug users, however, they do not see that they have a probem surrounded by other users who are in similar situations. and debt are just the way of the world, a necessity, and nothing to worry about"
Ted Rudow III, MA