Underwater Mortgages and Negative Equity is in FULL BLOOM

By
Real Estate Agent with Coldwell Banker Residential Brokerage

The latest foreclosure debacle by BofA, GMAC, JPMorgan and PNC will, IMHO, most undoubtedly be joined by Wells Fargo, Citi and even Fannie & Freddie. To that point it is our belief that a meaningful and useful solution to the negative equity in residential real estate is one major component that the administration and the treasure refused to address. To add fuel to this fire, is it not interesting that the latest "hot dog" bill from Barney Frank and Chris Dodd (Dodd-Frank Wall Street Reform and Consumer Protection Act) specifically signals out and distances itself from helping folks in the hardest hit areas of the country. If you review the list of eligible states, you will not see, California, Nevada, Florida, Arizona or Michigan, four of the most heavily devastated areas of the country, where homeowners are suffering with record depreciated home values and negative equity. Compare the list of states suffering with NEGATIVE EQUITY http://tinyurl.com/2exzzl8  with the list of states slated to received foreclosure mortgage assistance in the (Dodd-Frank Wall Street Reform and Consumer Protection Act) http://tinyurl.com/24ygb7x . Most of these homeowners are growing weary of making payments on their mortgages because they know that, at present, there is no way, in the next decade to two decades or even three decades, that they can ever sell their homes for the mortgage balance. To this point Check out our latest Video Blog at http://tinyurl.com/27no296 to see what I mean.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Donald Bradbury 10/12/2010 12:54 AM
  2. Michael Lissack 10/12/2010 04:11 AM
Topic:
ActiveRain Community
Tags:
foreclosure prevention
negative equity
mortgage crisis
doddfrank wall street reform and consumer protection act

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Rainmaker
517,041
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

What's your proposal? 

Oct 11, 2010 11:59 PM #1
Rainmaker
1,416,544
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

It is a mess...complicated further by it being a political issue. Not sure what the answer is..other than let the processes proceed and deal with the fallout!

Oct 12, 2010 12:42 AM #2
Rainmaker
189,590
Sonny Landau
St Louis Home Improvement and Painting Companies - Saint Louis, MO

Thank you, first of all!  

Recently I was asked to make home repairs to a home that the young couple was looking to sell in St. Louis and move to New York where he had recently found new employment. 

I was willing to do the work for FREE for this nice young couple until I did my homework and found that a realtor had lied to them about the market value of their home.  The realtor told them the home would sell for $212,00 failing to mention that the home next door was sold for $110,000 and the home on the corner was sold for $88,000 and that there were other thinks like a house that  the government had sealed for too many violations.  He did know just how badly these thinks had made him upside down in his mortgage and that spending any amount of money to fix the home up, try to rent it to cover his mortgage payment of $1,600 a month which was totally ridiculous for the area.  His mortgage was another one of those lovely local mortgage brokers who took large fees from people who didn't qualify and ran to the bank fully knowing that the people were in trouble.  They wanted a home, he made it happen even though the home was known by everyone that it had termites, electrical problems, a bad foundation, and mold!

Yes...they are nice people!  I am very sorry for them, but I know of no way other than for them to walk.  Why has there not been a public suit against these individuals and their mortgage brokers for putting lies on the mortgage papers?

 

Tim, I believe we all need to get more active from the local level of government to top levels to be sure that people who have a financial interest and experience are brought to assist and not theoreticians.

 

Thanks for forum!

 

St Louis Painter

 

 

Oct 12, 2010 12:45 AM #3
Rainmaker
1,610,047
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

We're all waiting to see how this shakes out and potentially delays a real estae recovery !!!

Oct 12, 2010 12:56 AM #4
Rainmaker
249,063
Reshawna Leaven
Keller Williams Realty - Bowie, MD
Hoping to be your RealtorĀ® for Life!

Nice post. We shall all see how this plays out the open coming months. Whether good or bad we have to stay up on the current news and updates as they come available. Only the strong will survive.

Oct 12, 2010 01:11 AM #5
Rainmaker
877,062
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

I'm with you but 2-3 decades might be a bit of s stretch. Regardless, the new normal is not going away anytime soon, and this will take a long time, perhaps a decade, to fully recover. 

We need new and better leadership. 

Oct 12, 2010 01:23 AM #6
Rainmaker
516,073
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

Not sure what to make of this, it's a pretty confusing mash-up starting with a mixing of metaphors in the title. I thought that political posts were being discouraged these days...Like Tim said in comment #1, What is your proposal?

Oct 12, 2010 01:58 AM #7
Rainer
254,866
Geoff ONeill
John L. Scott Medford - Medford, OR

What do you think the solution is?  It's not clear that this will take decades to recover unless we have no new jobs.  The private sector added jobs last month, and the public sector lost jobs.  This is a step in the right direction, as we need less tax burdon, and more small businesses to succeed.  This is the only way we can drive up demand.  Real Jobs.  The prices will come back, but we not see the silly 20% a year appreciation like we did from 2002- to early 2006.

Oct 12, 2010 02:38 AM #8
Rainer
108,514
Ron T. Weems Jr.
Weems Property Group | KW Northwest - Marysville, WA

I agree, what is the point. This has been coming for years. People just didn't want to believe it. History is repeating it self. We are just going through a recession that we needed to go through to become stronger financial nation. It is just a matter of time, before we get back to were we need to be. 

Oct 12, 2010 03:00 AM #9
Rainer
136,894
Brent & Deb Wells
LivingWell Properties - Prosper, TX
Prosper TX

Well I think you nailed it in your first 3 sentences by invoking the name of Barney Frank, anytime I see his name attached to a bill I know we are in for a world of hurt. How is this all going to wind up I am not sure, but it will be painful and drawn out. I just pray they can't do more damage than they already have.

-Brent

 

Oct 12, 2010 03:14 AM #10
Rainmaker
2,190,295
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

We knew this years ago...but stuck our heads in the sand. Now, we pull our heads out of the sand and are surprised to see it still here. Decisive action is missing here......Reduce every-ones payment for 5 years and meanwhile, we can use time to come up with other answers. No answers or stalling answers doesn't work....

Oct 12, 2010 03:28 AM #11
Rainmaker
100,061
Stephanie McCarty
McCarty Homes - Canton, GA
REALTOR

I agree - why aren't we hearing more about mortgage fraud prosecutions?  

Oct 12, 2010 03:35 AM #12
Rainmaker
125,264
Will Handley
Progressive Inspection Service - Dana Point, CA
Certified Master Inspection Services

Let the market reset!  Get the fed out of it, repo the homes, let investors or other buyers move into the market and consume the inventory as has been the standard throughout the history of the housing industry.

Oct 12, 2010 03:37 AM #13
Ambassador
757,211
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

Michael,

 This is one of the worst plans I have ever read. Where is the pork? Your proposal does nothing to protect the rain forest, or fund inner-city art festivals. If enacted, your plan would only solve one major problem facing the nation.

Oct 12, 2010 04:42 AM #15
Rainmaker
1,890,515
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

I think 2 to 3 decades isn't that far from the truth. I did the math on a $500,000 home that had fallen 50% and at 4% appreciation per year, compounded, it would take 19 years to regain that equity. Anybody think we're going to see even 4%?

Oct 12, 2010 05:58 AM #16
Rainmaker
247,298
Jeff Wilmoth
HomeStar Financial Corporation - Newnan, GA

misery loves company....

Oct 12, 2010 06:42 AM #17
Rainmaker
445,926
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Elizabeth #16 - I'm with you on that. The math problem can be described as follows:

If the value drops 50%, it has to go up 100% to get back to where it was. But if you factor in the time value of money, it has to go up more than 100%.

Oct 12, 2010 08:19 AM #18
Rainmaker
539,909
Richard Bazinet /MBA, CRS, ABR
AZuRE Team - Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

Sure, I agree. I can only speak of Arizona, but before the home value depreciation took place, we had home appreciation on a grand scale leading up to 2005. We have seen homeowners who's property values doubled to tripled by doing what? Absolutely nothing. Just hanging on for the ride. So a deprecition of 50% on an appreciation of 150% for the laggards in some way summarizes the situation.

Oct 12, 2010 02:12 PM #19
Rainmaker
107,623
Matt Kofsky
Transaction Realty 500 Reno, Nv. - Reno, NV

Hi Elizabeth # 16,  Where I live, historically, it goes up 3% per year.  How does 27 years sound to you?  

Oct 12, 2010 05:11 PM #20
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Frank and Dodd were never interested in helping out the people.  It's all about them and the elite political class.  Until we vote these idiots out of office, it will be more of the same, believe me.  Important to VOTE this November. 

Oct 13, 2010 02:43 AM #21
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G-II Varrato II

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