Over a year ago, I said this:
People have been willing to buy because they feel that housing was as close to a sure bet as could be had. Sure they may extend themselves, but it would only be for a couple of years until the markets climbed and they could either refi or sell and move on. There's going to come a time when people, regardless of what they hear everyone telling them, are going to understand that the property they own is not worth what they paid for it. Or that the property they own is now unaffordable since they are now making principal and interest re-payments to their lenders. I think that time is now.
My timing was off a bit, it always seems to be, but it sure looks like this is coming to fruition right now. My focus back then was that these homeowners would no longer be able to extract equity from their houses to fund lifestyles in the manner required to keep the economy humming along. What I didn't ask then, or since, is what are these underwater people going to do? I thought they'd simply hunker down and eat Ramen for a while. There is another choice though:
"Another effect we are seeing has been a challenge with the media and consumer groups; and with consumers willingness just to walk away from homes. We haven't seen anything like this since Texas during the oil bust and people just willing to declare bankruptcy and walk away. We are seeing a lot of that similar type social phenomenon occurring, especially in California. And that is concerning to us."
Which, if it becomes more acceptable, could spell serious trouble for lenders. And it looks like it just might:
If you are facing or considering foreclosure, you're not alone.
- Are you stressed out about your mortgage payments?
- Do you have little or no equity in your home?
- Have you had trouble trying to sell your house?
- Is your home sinking under the waves of the real estate crash?
- What if you could live payment free for up to 8 months or more and walk away without owing a penny?
