not see that both previous, and now future, foreclosures...
occurred in the same, select places and will continue.
These are two MUST READ articles.
What these two article also show U.S. is that MOST of the underwater home owners
What these two article also show U.S. is that MOST of the underwater home owners
already took their paper profits out of their homes..., in cash.
Now, they are going to have to pay some or all of it back.
If they can.
And, if they cannot, the lender/bank that gave them the HELOC will have to eat it.
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JGBHimself | 06/02/10 2:55 PM
Very good article - probably the best Jumbo loans data we have seen in over a year. Thanks.
As you point out for U.S., the "Jumbo Loan" problem is huge, not being fixed or addressed, and will materially affect the states that have them.
In a recent AZ Republic article they discovered an interesting other problem - builders are now able to buy fully ready lots for a fraction of what it costs to develop them, or what they were a few years ago. That means that they can now build and sell a new home for from 40% to 60% of what the same home was priced at the peak. All existing sand states home owners - & especially those with jumbo loans - are now being attacked from both sides - foreclosures and now brand new homes.
Could get ugly.
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I didn't include it in my article, but I have California stats for origination of HELOCs since January 2003.
It's incredible. At the peak in June 2005, 91,000 purchase HELOCs were issued. That does not include any refis.
Do you know how many were originated in March of this year? 22 for the entire state. And 18 refi cash outs ... for the entire state.
The banks have completely pulled the plug on HELOC lending there. They've also reduced or eliminated the unused credit lines of many current HELOC holders on the grounds that the houses have dropped substantially in value. Most California borrowers also have a HELOC or second mortgage. They are really up the creek. Many were using their lines of credit to pay their mortgage and/or live on. Not much longer though.
Thanks again. Keith Jurow
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Is Massive Refinancing During Bubble Years a Ticking Bomb?
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Investors Played a Key Role in Creating Housing Bubble
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