1 in 4 mortgages 'underwater'

[coyotes_geek]

CG: Oh by the way, that whole mortgage thing is still going on...........

********

NEW YORK (CNNMoney.com) -- In a sign that more foreclosures could be on the horizon, 23% of people with mortgages owe more than their home is worth, according to a report released Tuesday.

Almost 10.7 million U.S. mortgages were "underwater" as of September, said research firm First American CoreLogic.

Another 2.3 million homeowners are within 5% of negative territory, the report said. The two figures combined comprise almost 28% of all residential properties with mortgages.

Negative equity, also called an "underwater" or "upside down" mortgage, has become more common as home values plummet. The report is closely watched because borrowers who are underwater are more likely to be foreclosed.

Would you walk away from your house?
Foreclosures have been rampant for some time, but lately the tide of decay had seemed to be slowing -- so Tuesday's report could dent optimism for the housing market over the next few months.

State totals: The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the housing bust: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%.

These five states have been especially beleaguered because of a high rate of prime loans that went bad. Many of those loans were option-adjustable rate mortgages, in which borrowers could choose to make minimum payments that were so low they did not even offset the interest being ac ulated.

When that ac ulated debt reaches a certain point -- usually 10% to 25% more than the original principal -- the option-ARMs loans are recast into fixed-rate mortgages. When that happens, many borrowers cannot afford the new payments.

http://money.cnn.com/2009/11/24/real...ater/index.htm

[EVAY]

CG: Oh by the way, that whole mortgage thing is still going on...........

********

NEW YORK (CNNMoney.com) -- In a sign that more foreclosures could be on the horizon, 23% of people with mortgages owe more than their home is worth, according to a report released Tuesday.

Almost 10.7 million U.S. mortgages were "underwater" as of September, said research firm First American CoreLogic.

Another 2.3 million homeowners are within 5% of negative territory, the report said. The two figures combined comprise almost 28% of all residential properties with mortgages.

Negative equity, also called an "underwater" or "upside down" mortgage, has become more common as home values plummet. The report is closely watched because borrowers who are underwater are more likely to be foreclosed.

Would you walk away from your house?
Foreclosures have been rampant for some time, but lately the tide of decay had seemed to be slowing -- so Tuesday's report could dent optimism for the housing market over the next few months.

State totals: The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the housing bust: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%.

These five states have been especially beleaguered because of a high rate of prime loans that went bad. Many of those loans were option-adjustable rate mortgages, in which borrowers could choose to make minimum payments that were so low they did not even offset the interest being ac ulated.

When that ac ulated debt reaches a certain point -- usually 10% to 25% more than the original principal -- the option-ARMs loans are recast into fixed-rate mortgages. When that happens, many borrowers cannot afford the new payments.

http://money.cnn.com/2009/11/24/real...ater/index.htm

And this is news...how?

[boutons_deux]

news?

OK, not really, just a reminder how disconnected Wall St greed is from Main St pain.

[coyotes_geek]

And this is news...how?

I guess it isn't. Back to Sarah Palin...........

[spursncowboys]

This is good. Smart consumers can get 25% of the houses for sale cheaper than they are worth.

[CosmicCowboy]

This is good. Smart consumers can get 25% of the houses for sale cheaper than they are worth.

They could if consumers could borrow the money, but in case you haven't heard, banks are tighter than a fishes asshole these days when it comes to consumer lending. They would much rather borrow billions from the US government at 0% and speculate in hard assets and make double digit returns as the dollar drops in value.

[spursncowboys]

They could if consumers could borrow the money, but in case you haven't heard, banks are tighter than a fishes asshole these days when it comes to consumer lending. They would much rather borrow billions from the US government at 0% and speculate in hard assets and make double digit returns as the dollar drops in value.

Oh really. are the banks still without money? I thought the first stimulus was to give liquidity to the banks.

[coyotes_geek]

Oh really. are the banks still without money? I thought the first stimulus was to give liquidity to the banks.

Banks having money and banks being willing to lend money aren't the same thing.

[Winehole23]

Banks having money and banks being willing to lend money aren't the same thing.

Perhaps inadvertently, SnC has drawn attention to the false problem of liquidity. Last fall, we papered over massive imminent default with the promise that more liquidity would reverse the credit crunch. It didn't. Why not? The real problem was solvency, not liquidity.

Turns out, mortgage lending in a declining market with a shrinking pool of qualified borrowers is imprudent compared to various kinds of investing. Instead of lending out money to homebuyers and businesses, it's objectively smarter for banks to lend it to one another for a guaranteed 3% return, or to find even bigger returns in forex, commodities and securities.

Especially so with wave of CRE defaults expected within the next year, plus ARM resets, and defaults and bankruptcies rising pretty much across the board.

The bailout money was a survival stake for the banks and broker-dealers. Anything else that was promised was a lie.

[coyotes_geek]

Perhaps inadvertently, SnC has drawn attention to the false problem of liquidity. Last fall, we papered over massive imminent default with the promise that more liquidity would reverse the credit crunch. It didn't. Why not? The real problem was solvency, not liquidity.

Turns out, mortgage lending in a declining market with a shrinking pool of qualified borrowers is imprudent compared to various kinds of investing. Instead of lending out money to homebuyers and businesses, it's objectively smarter for banks to lend it to one another for a guaranteed 3% return, or to find even bigger returns in forex, commodities and securities.

Especially so with wave of CRE defaults expected within the next year, plus ARM resets, and defaults and bankruptcies rising pretty much across the board.

The bailout money was a survival stake for the banks and broker-dealers. Anything else that was promised was a lie.

Solid observations. It certainly looks like the banks trust each other more than they trust homebuyers these days, and they have a valid reason to do so. Even after weeding out the unqualified candidate homebuyers banks still have cause to be afraid of the qualified candidates. All it takes is a job loss to turn a qualified candidate into a high foreclosure risk. , we're even seeing cases where people with stable incomes get underwater and then go buy a bigger house that's in foreclosure and then just abandon the one they were in.

[Wild Cobra]

This is good. Smart consumers can get 25% of the houses for sale cheaper than they are worth.

And what they are currently worth as a nation average is still 30% too high.

Some people were looking for that "get rich scheme" and were caught when the bubble burst.

Some people took second mortgages when they should have just been happy with their lifestyles.

Some people were flat out unlucky in this economy and lost their jobs. It's this third group I sympathize with.

[spursncowboys]

Perhaps inadvertently, SnC has drawn attention to the false problem of liquidity. Last fall, we papered over massive imminent default with the promise that more liquidity would reverse the credit crunch. It didn't. Why not? The real problem was solvency, not liquidity.

Turns out, mortgage lending in a declining market with a shrinking pool of qualified borrowers is imprudent compared to various kinds of investing. Instead of lending out money to homebuyers and businesses, it's objectively smarter for banks to lend it to one another for a guaranteed 3% return, or to find even bigger returns in forex, commodities and securities.

Especially so with wave of CRE defaults expected within the next year, plus ARM resets, and defaults and bankruptcies rising pretty much across the board.

The bailout money was a survival stake for the banks and broker-dealers. Anything else that was promised was a lie.

Great point. However, there was a liquidity problem. You are painting a picture of no available loans for homes. Thats not the case. Sure subprimes are gone, and I think ARM's are illegal or are easier to see.
" Generally speaking, mortgage lenders today are requiring borrowers to have better credit scores, more substantial down payments and better debt-to-income ratios — especially if those borrowers want to qualify for the best interest rates on a loan." -http://www.homebuyingins ute.com/mortgageprocess_article26.php

FHA is still giving loans to people with bad credit.

[boutons_deux]

lenders fired 1000s of mortgage paper grinders, so now even if they wanted to lend, there is a processing bottleneck, and they now demand much more paper, often not easy to produce, do enting credit, revenue, liabilities, making the bottleneck worse.

here's another angle:

In Crazy New Landscape For Banks, Taxpayers Are The Big Losers
from HuffingtonPost Full Feed by The Huffington Post News Editors

Fifty banks collapsed during the third quarter of 2009, while more than one in 15 are on the verge of failure -- the highest percentage since 1992 -- according to a new report from the Federal Deposit Insurance Corporation that depicts a crazy new landscape for banking in which taxpayers are the consistent losers.

Because of all the failure and near failures, the fund that guarantees deposits hit the red for the first time since 1992.

Meanwhile, some banks are making money hand over fist, with the sector as a whole posting $2.8 billion in profits -- up from a $4.3 billion loss in the second quarter.

They're doing so in part by borrowing cheap federal money -- subsidized by the American taxpayer -- even while massively cutting back on lending. The plunge in lending since last quarter is the largest recorded since federal regulators began keeping track in 1984.

The whole point of the taxpayer-funded bailout and the cheap money for banks was to recapitalize them in hopes of stimulating lending, but the banks are holding back -- which is seriously slowing the economic recovery.

"We need to see banks making more loans to their business customers," Federal Deposit Insurance Corporation Chairman Sheila Bair said Tuesday in a statement. "This is especially true for small businesses that rely on FDIC-insured ins utions to provide over 60 percent of the credit they use."

In March, the Obama administration announced a $15 billion plan to jump-start government lending to small businesses. But construction and industrial loan balances at banks dropped 6.5 percent in the third quarter; overall loan balances dropped 2.8 percent.

"I will not rest until businesses are investing again and businesses are hiring again and people have work again," President Barack Obama said Monday.

But the gulf between the haves and have-nots in the banking industry is widening, imperiling the very ins utions whose lending is supposed to fuel the recovery.

• The nation's 7,408 smallest banks overall broke about even during the quarter.
• The 579 mid-sized banks, loosely defined as holding assets between $1 billion and $10 billion, recorded an average loss of about $3 million during the quarter.
• The biggest 112 banks, those with more than $10 billion in assets, recorded an average profit of nearly $42 million, according to the FDIC's latest figures.

Only three new banks were formed in the three-month-period ending in September, the smallest quarterly total since World War II.

Christopher Whalen, a noted bank analyst at Ins utional Risk Analytics, told HuffPost
the situation in the banking industry is "pretty gruesome." His firm tracks the overall level of stress in the sector via an index -- and Whalen said U.S. banks haven't seen today's levels of stress since the 1930s. It's "much worse" today than during the savings-and-loan crisis of the early 1990s, he said.

He cautioned that the fourth quarter, which ends Dec. 31, is going to be even worse. While economists and the administration point to economic indicators that suggest the economy is slowly improving, Whalen said that banks always trail behind the rest of the economy.

"We're going to have a bloodbath," he said. Banks were under pressure during the third quarter to cut costs and increase revenue because of the federal government's "stress tests" in the spring -- exams that gauged the health of the country's 19 biggest banks. Federal regulators were trying to determine which banks needed to raise more money. Revenue was a key component of the formula.

So banks tried to outperform in order to avoid being forced to raise more money, Whalen said. Indeed, expenses across the industry fell and profit increased. But next quarter, banks on solid footing will aggressively write off their bad loans -- driving up losses -- and those in a more precarious position will simply continue to "muddle along," Whalen said. Either way, he predicted, lending will continue to fall.

"That's the problem for the economy. We've got probably a third of the industry that's contracting," Whalen said. "They're not making new loans, they're basically in a defensive posture, and that's not going to change."

[Nbadan]

big surprise...the banks are being greedy by speculating instead of caring about 'national interests'...

[spursncowboys]

big surprise...the banks are being greedy by speculating instead of caring about 'national interests'...

3% isn't greedy. It's safe.

[Wild Cobra]

big surprise...the banks are being greedy by speculating instead of caring about 'national interests'...

Never expect a corporation to have the best interest of the nation. They are like liberals, only care for themselves.

Those who cannot manage their assets should fail. They should not be rewarded with money, That only prolongs the dependence on the government, like liberals are dependent on the government.

Our current government wants your reliance on them. That's how liberal politicians get your votes, keeping them in power.

[Nbadan]

3% isn't greedy. It's safe.

...3% is the 'safe' return....they are speculating on gas/oil/commodities that have higher returns but greater risks...

[Nbadan]

Our current government wants your reliance on them. That's how liberal politicians get your votes, keeping them in power.

...tell that to Bush and the GOP in Congress...

[spursncowboys]

...tell that to Bush and the GOP in Congress...

Bush needs your vote how?

[Nbadan]

Bush needs your vote how?

To keep him from being indicted for war crimes against humanity?

[spursncowboys]

To keep him from being indicted for war crimes against humanity?

What crime?

[Nbadan]

nevermind...

[Winehole23]

A decade after U.S. home sales peaked, 15.4 percent of owners in the first quarter owed more on their mortgages than their properties were worth, according to a report Friday by Zillow Inc. While that’s down from a high of 31.4 percent in 2012, it’s still alarmingly above the 1 or 2 percent that marks a healthy market, said Humphries, the chief economist at the Seattle-based real-estate data provider. Worse yet: The pace of healing is losing steam.

http://www.bloomberg.com/news/articl...ars-after-bust

[Blake]

The term "home owner" is so ubiquitous.

You're forever paying someone for your home. Forever.

[boutons_deux]

and foreclosures are still running way ahead of 2006



The Banksters Great Depression is far from over, and several signs show the 2015 economy is weakening.