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Thread: Home Mortgages

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    Default Home Mortgages

    This housing market is crazy. Certain indications make it seem as if it is rising then you read an article like this and it looks like we will be f*cked in a couple of years. I have a few friends who are trying to buy their first homes but are going back and forth between do they buy today or continue to wait on the sidelines with the idea the market is going to continue to fall.


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


    NEW YORK (Reuters) – The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

    Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

    "We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.

    Of prime conforming loans, 41 percent will be "underwater" by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties' value, up from 29 percent, it said.

    "The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding," the analysts said. Prime jumbo loans make up 13 percent of the total market.

    Deutsche's dire assessment comes amid a bolt of evidence in recent months that point to stabilization in the U.S. housing market after three years of price drops. This week, the National Association of Realtors said pending home sales rose for a fifth straight month in June. A widely watched index released in July showed home prices in May rose for the first time since 2006.

    Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

    The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

    Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were "affordability products" originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

    Of option adjustable-rate mortgages -- which cut payments by allowing principal balances to rise -- 89 percent will be underwater in 2011, up from 77 percent, the report said.

    Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

    "For many, the home has morphed from piggy bank to albatross," the analysts said.

    http://news.yahoo.com/s/nm/20090805/...g_deutschebank

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    Quote Originally Posted by cawacko View Post
    This housing market is crazy. Certain indications make it seem as if it is rising then you read an article like this and it looks like we will be f*cked in a couple of years. I have a few friends who are trying to buy their first homes but are going back and forth between do they buy today or continue to wait on the sidelines with the idea the market is going to continue to fall.


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


    NEW YORK (Reuters) – The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

    Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

    "We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.

    Of prime conforming loans, 41 percent will be "underwater" by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties' value, up from 29 percent, it said.

    "The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding," the analysts said. Prime jumbo loans make up 13 percent of the total market.

    Deutsche's dire assessment comes amid a bolt of evidence in recent months that point to stabilization in the U.S. housing market after three years of price drops. This week, the National Association of Realtors said pending home sales rose for a fifth straight month in June. A widely watched index released in July showed home prices in May rose for the first time since 2006.

    Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

    The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

    Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were "affordability products" originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

    Of option adjustable-rate mortgages -- which cut payments by allowing principal balances to rise -- 89 percent will be underwater in 2011, up from 77 percent, the report said.

    Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

    "For many, the home has morphed from piggy bank to albatross," the analysts said.

    http://news.yahoo.com/s/nm/20090805/...g_deutschebank
    I can readily see how this could happen. Get ready for a rollercoaster ride.
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    Heaven forfend that Congress pass a bill allowing bankruptcy judges to restructure home mortgage loans as they are permitted to do with other debt.

    It seems to me that is opposing such measures the banks are really shooting themselves in the foot. If jingle mail becomes the norm, and it certainly will increase if almost half of homeowners are underwater, housing prices are going to continue to tank tank tank. It will not be pleasant.

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    thanks for the info Cawacko.

    While this sucks for a lot of people unfortunately, I'm hoping that a couple beachfront bungalows I've had my eye on fall into my price range soon.

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    Quote Originally Posted by Cypress View Post
    thanks for the info Cawacko.

    While this sucks for a lot of people unfortunately, I'm hoping that a couple beachfront bungalows I've had my eye on fall into my price range soon.
    Keep your eyes open man because there are opportunities out there. I work in real estate so whether its commercial or residential this stuff interests me and I was up in Lake Tahoe last weekend and heard a handful of stories of people who bought second homes there in '06 and '07 and who are really hurting right now and having to sell at steep discounts. If the area you are looking is 2nd homes for a lot of people there's a good chance a few of them might fit in that desperate situation. Good luck.

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    This does not speak well for a speedy recovery.
    Bush doubled the debt from 5 trillion to 10 trillion.
    Proving tax cuts work!

    Bush asked for and signed for the TARP money.
    The Republican senate leader backed Bush on this.

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