Not too terribly surprising given that the market peaked in most areas earlier this year. If you bought at the top of the market with a very low down payment, you’re likely underwater.
Surging mortgage rates aren’t just raising the cost of purchasing a new home. An alarming number of recent homebuyers have discovered they already owe more on their property than it’s worth, according to a new analysis.
Some 250,000 people who took out a mortgage this year to buy a home are now underwater, meaning they owe more on their loan than the home is worth, Black Knight, a mortgage software provider, found. Another million have less than 10% equity.
You know what’s going to happen… Biden and Team will use this to buy more votes by coming up with some Government rescue program for these idiots that forged ahead with a bloated, overpriced, ill-advised purchase.
It honestly doesn’t matter if you are underwater, as long as you can make the payments. The only issue is that you can’t take out a HELOC on your house. I was underwater for like 7 years after 2008. Just kept making payments.
Now, if we see a HUGE wave of unemployment and people can’t make their payments, then we will have an issue like we saw in 2007. But the banks are a little more prudent in their loaning decisions this time, so no one in the industry is predicting this.
But the banks are a little more prudent in their loaning decisions this time, so no one in the industry is predicting this.
Until you got there, I was nodding “Yup!!”
You KNOW the banks are more prudent this time…………how?
>You KNOW the banks are more prudent this time…………how?
Gut instinct, or maybe Biden’s press secretary said it, or political bias. I’m going with the third option.
The point is this: just because we have not heard that there is a problem doesn’t mean there is no problem.
And in any case, ‘imprudent lending’ won’t be revealed for a few years.
@ Johhny: But the banks are a little more prudent in their loaning decisions this time, so no one in the industry is predicting this
Correction: banks are a lot more prudent. They have no choice to do otherwise.
TARP (Troubled Assets Relief Program) in 2009 revamped underwriting standards imposed upon mortgage lenders, including subprime lenders.
In 2005 the default rate was .46% of mortgages. In 2010 it peaked at 2.23%. In 2011 it dropped to 1.45%. It has steadily declined and in 2021 it was .11%
Here is a 10 year lookback from 2018 to 2008 as to changes made by Fannie Mae. 2018 vs. 2008: Better Equipped for the Next Mortgage Market Downturn In 2018 the foreclosure rate was .47%. Back to where it was before things escalated.
Yes, Mark….but JonnyV pointed to the only metric that counts: are they making the payments?
There will be a recession; most biz leaders suspect short and shallow. That’ll put some air under the foreclosure numbers, but it probably won’t be meaningful.
OTOH, if the recession is sharp and long………..all the down payments and credit scores on earth won’t mean squit if the payments aren’t happening.