Six Trillion Dollars in Home Equity Gone
By Kurt O'Keefe, Attorney at Law on Apr 30, 2008 in Bankruptcy Legislation, Chapter 13 Bankruptcy, Foreclosure Issues, Michigan, Mortgages, Personal Finance
That is the guess of a Washington Think tank based on the Case-Shiller home price index, as reported in today’s Los Angeles Times.
Supposedly, this will complete the deflation of the housing bubble started by Mr. Greenspan.
This will put more homes underwater, worth less than the amount of the mortgages borrowed against the house.
This writer has been screaming “no bailouts!” for years. Most Americans see no reason to help the lenders who made bad loans, or the builders who also profited, or anyone else in the sub-prime mortgage fiasco.
The decline in home value can only increase the foreclosure tidal wave, 6.5 million loans by 2012, according to one bank’s forecast.
The best explanation of what is coming that I have seen is this You Tube Video on the sub-prime crisis moving to the next category of mortgages, the so-called “Alt-A” mortgages.
As opposed to a bailout, I still advocate changing the Chapter 13 laws to allow bankruptcy courts to re-write mortgages secured by your residence, the same as can now be done with virtually any other piece of property.
What does this mean for Joe Six-Pack?
Keep track of what your house value is, make sure you know what you are paying for.
What you hear about what home values will be in the future is guesswork, no matter who is talking. Keep track of how much you owe on your home, and what it is worth, so you know what you are doing.
At some point, does it make sense to walk away? Maybe, but you cannot even ask that question without the bases facts, value of the home, balance on the mortgages.
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