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View Full Version : Homeowners, Lenders Skirt Default, May Curb U.S. Housing Slump



Sapiens
03-21-07, 04:27 PM
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=an4wlQaDRorE



March 21 (Bloomberg) -- Rolando Ruiz and Stephanie Rodrigues telephoned their mortgage lender two weeks ago and offered to hand over the keys to their three-bedroom house in Providence, Rhode Island. They lost their jobs and haven't made a loan payment since January.

``I told the bank to come get the keys and just let me know when we need to be out, but they said why not put it up for sale and we might be able to work something out,'' said Rodrigues, the 22-year-old mother of two girls.

Homeowners such as the Rhode Island couple are finding their mortgage companies eager to accept a sale price that falls short of a property's loan balance -- a so-called mortgage short sale.


We saw this in Japan! Now we are seeing it here. Ha!

grapejelly
03-21-07, 08:37 PM
They will pursue shortpays and renegotiations and so forth. And they could be helped by a bailout. The result could be a long term real slide in home values but not a nominal one in some areas. So I predict:

1. first to go are the sub-$100K houses. These are going to be big trouble.

2. second are the sub-$500K houses. Enormous trouble.

3. the $500K - $1m houses will hold up the longest in general.

4. houses built in the exurbs will fall faster than those in the suburbs

5. houses where there is a lot of land and construction going on with homeowners trying to recover their stranded capital will fall greatly over a relatively short period of time (40% in nominal terms over the next 18 months.)

Sapiens
03-22-07, 09:14 PM
................