DISQUS

Ann · 1 year ago

Ok..so what are the lenders who have these time bombs of NEG AMS going to do? It seems that this country is always playing catch up on our problems rather than dealing with them on the smaller level...these lenders should start to be proactive and protect their shareholders by contacting these borrowers, especially the ones that are current, and make efforts to transfer these high risk loans to fixed low interest ones..forget trying to do the whole..lets see if you qualify..we already know most of these borrowers WON'T qualify under today's guidelines and these lenders should eat their own crow with the days of easy lending..but the time has come to deal with the storm before it hits the American economy...

Sue · 1 year ago

Ann,
I agree with you all the way! Why don't the banks allow people to switch to a more affordable mortgage rather than guarentee themselves to have more foreclosures? I think many homeowners would be willing to eat the loss of equity on their home if their loan conditions were more favorable. Hindsight certainly is 20/20, but given the conditions of the housing market today it would seem prudent to limit your losses.

Sue

Fielding Mellish · 1 year ago

The beginning of the end of falling home values is when we reach rough parity between mortgage payments on a house and comparable rental income for the same house. When a house that would rent for, say, $1,500 / month can be bought for a roughly comparable mortgage payment (including taxes & insurance, using a fixed rate mortgage with minimal down payment), then home prices will have reached their natural historic levels. A house that rents for $2,000/mo is not worth $600,000 in most cases.

Another way to look at it is that home values should equal approximately 100 times gross monthly rent. That's a historical standard that goes back a century. It may not hold true in Manhattan or San Francisco, but should hold true in Atlanta and Houston, etc. A property that rents for $2,000 is worth $200,000 +/-, but not $400,000 or more.

Mick Mortgage · 1 year ago

www.mortgagedirty.com

Brad G · 1 year ago

Its not like we did not see all of these foreclosures coming. I do not see why anybody would want to buy a home in the next two years if they do not have too. Home prices are going to continue to fall. Do not think that you are getting a deal by buying a foreclosed home because its worth half of what it was worth when it was bought 3 years ago. Find out what the property was worth in 2001 than make an offer 5% below that.