‘Underwater’ Mortgages to Hit 48%, Deutsche Bank Says (March, economy, income)

[oz in SC]

The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today.

As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank.

“Borrowers may also ‘ruthlessly’ or strategically default even without such life events,” they wrote.

Home prices will decline another 14 percent on average, the analysts wrote.

‘Underwater’ Mortgages to Hit 48%, Deutsche Bank Says (Update1) - Bloomberg.com

[oz in SC]

Some 24% of owner-occupied homes had mortgage debt that exceeded the values of those homes at the end of June, according to data from Equifax and Moody’s Economy.com. That number rises to 32% when looking at the share of homeowners with mortgages that don’t have equity left in their homes.

Nearly 10% of owner-occupied homes now have mortgage debt with loan-to-value ratios of at least 125%, and roughly half of those homes have mortgage debt with loan-to-value ratios of 150% or more.

More Homeowners ‘Upside Down’ on Mortgages - Developments - WSJ

[Nav]

Quote:

Nearly 10% of owner-occupied homes now have mortgage debt with loan-to-value ratios of at least 125%, and roughly half of those homes have mortgage debt with loan-to-value ratios of 150% or more.

True, but housing prices are cyclical. Its an investment and people need to stop viewing it as risk free way to build wealth. The concept of writing down mortgages is in itself ludicrous. Write the mortgage down so it fits within people's budget??? What happens to these write downs when the people get new jobs, their incomes rise or the market once turns and head the other way? is their a "payback" requirement??? Now instead of helping them, we have given them a "Bonus" pool of wealth that was not earned or merited. Instead of a bailout, how about the banks deferring a chunk of the loan that will only become due at sale time, if there are any available funds. At the time they purchased their houses the loans fit the value. Once value has dropped, they are not entitled to "recovery funds".

when is the last time you had Wall street tell you that it was sorry that you bought high and had to sell low, so here's some cash to make up for your misfortune

Nav