When the market was active way back 3-5 years ago you could buy a house and get a 100% subprime loan and you were pretty safe. I mean you had 2 or 3 years to correct your credit, or if you got in too deep you could just sell the house for a profit. I mean you couldn't lose. Pretty cool huh?
Well, then pretty much without notice the values stopped going up. As a matter of fact in some areas the values started going down. Hey, I've got a problem or I'm going to have because;
I don't have any equity!
Well, I can/could make the payments at the current rate, but when it increases I'm in trouble. Where's the plan to help me? Increasing the FHA limits, while it's a nice idea isn't going to help. Can they do 110% LTV (or higher)? Probably not, because what investor would buy those at any rate, even if they could be insured.
The fact that I don't hear any of our political leaders or the national media focusing on this problem doesn't surprise me. I really don't feel that they understand all of the problems. They'll probably focus on that which is politically correct or politically advantageous.
But, what about the investors themselves? Don't they realize that along with everything else that their LTV's have increased right before their very eyes. Their investment (property) value has vanished. Probably not.
So, what's the solution to this problem? Frankly, I don't know, not for those who want to stay in their homes. For those that want out, fire up that tax relief legislation and sharpen your short sales skills. And the homeowners themselves what's their reaction to some of the proposed solutions?
All they've got to say is:
Hey, I Don't have any Equity!
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