US Foreclosures 2nd wave

[ace00]

Negative equity is irrelevant unless you are forced to sell.

This is also a widely held misconception / platitude. I hear it about my ISAs a lot.
You need to consider the time-value of money. It's a very important concept. In summary, you need to consider how much your invested money would be worth if it had been in a bank for the duration. Then you need to consider inflation going forward, and then you will see that in fact you will never reach the value of that money barring another huge bubble in that asset class, in the near future. Several of my hard-earned ISAs are now effectively worthless due to this. Which is somewhat annoying.

[PM-Junkie]

Negative equity is irrelevant unless you are forced to sell.

Utter garbage, and further demonstration (if any were needed) how little you understand economics. Negative equity most definitely is NOT "irrelevant" - it has a direct impact on comsumer confidence whether or not they are selling their house - that impacts the amount of goods they buy - and that impacts companies' bottom lines.

[Cyberman]

That's a goodpoint in a recession. A council house can't go into negative equity. No, you laugh, but it's true in a deeper sense.

Anyway, look atsome examples: the woman who owes 207k on a house worth 150k, worreid about losing her 65k savings that she put in as deposit. So she paid at least 277k for a 150k house? I don't see that happening here so much, for private house-buyers (BTL yes, executive riverside apartments rubbish, yes). But it's not surprising if you know those places: recent development, houses and malls and nothing else. Nothing under it but 8 feet to sea level in a hurricane zone, and nobody who belongs to the area, because it was a wasteland just a few years ago. It can become a wasteland again just as quickly because nobody really wants to live there, they just moved because the arithmetic looked right. Now it looks wrong, and nobody wants to buy your house.

Edit: I almost mentioned DiscoStu's point too. Same point: our housing is less disposable. It has more intrinsic value.

Negative equity is irrelevant unless you are forced to sell. Those that are forced to sell generally have been lent too much and never had the ability to repay the loan once interest rates rose.That really should have been considered when they took out the loan. The greedy will be falling like flies but it is as much their fault as the banks and HMG.

[Mailman]

Second wave of foreclosures coming

this could get expensive for the US tax payer.

OK now as an exercise complete the following sentence:

The UK won't have a mortgage crisis like the US because.....

So it sounds like McCain got it right then eh...buy up all the dodgy mortgages out there, negotiate others down and save the economy.

Not bad for an old, out of touch, eccentric geezer innit?

Mailman

[Spacecadet]

I think that's why they live in cars. In other words no-one will sign a rental agreement with them. But look on the bright side, hey won't this be good for the car industry.

i don't think they can afford rent or the deposit (or both)
in terms of walking away from the house and not paying another penny/cent to the bank. There are only a small number of states in which you are legally protected.
In other states its either illegal or the bank can come after you if you have sizable other assets, e.g. a second home or a valuable car.

[BlasterBates]

I think that's why they live in cars. In other words no-one will sign a rental agreement with them. But look on the bright side, hey won't this be good for the car industry.

[DiscoStu]

>>in the US you can hand your house keys

is that true? I have asked a couple of americans who said it isn't and the bank will come after you in the same way as the rest of the world.

Looking here it would appear that you can, but it'll totally knacker your credit rating.

[Spacecadet]

>>in the US you can hand your house keys

is that true? I have asked a couple of americans who said it isn't and the bank will come after you in the same way as the rest of the world.

probably varies state to state

[Fishface]

...in the US you can hand your house keys to the bank, even if your house is worth less than the mortgage that's secured on it, and walk away owing nothing.

In the UK you'll be pursued until you sell a kidney.

>>in the US you can hand your house keys

is that true? I have asked a couple of americans who said it isn't and the bank will come after you in the same way as the rest of the world.

[ace00]

Prescient article from here:

http://www.marketoracle.co.uk/Article2728.html

The UK's property boom has to large part been fed by an army of buy to let investors (many of whom are amateur landlords). This is illustrated by the estimate of 1,000,000 buy to let mortgages, up from barely 20,000 ten years ago. However for some time new buy to let investors have been increasingly banking on capital gains rather then rental incomes covering the costs, which given the most recent HBOS statistics of 2 months of consecutive price drops for Sept and Oct 07, increasingly looks less likely going forward and hence primes the buy to let market to lead the stampede for the exit, resulting in a sharp drop in UK house prices.

2006 BTL value total 34.8 bill. quid.

[expat]

Our economy is different.

Yes, it's worse, with much less of manufacturing base than the US. We do have a lot more social housing that the US, however.

That's a goodpoint in a recession. A council house can't go into negative equity. No, you laugh, but it's true in a deeper sense.

Anyway, look atsome examples: the woman who owes 207k on a house worth 150k, worreid about losing her 65k savings that she put in as deposit. So she paid at least 277k for a 150k house? I don't see that happening here so much, for private house-buyers (BTL yes, executive riverside apartments rubbish, yes). But it's not surprising if you know those places: recent development, houses and malls and nothing else. Nothing under it but 8 feet to sea level in a hurricane zone, and nobody who belongs to the area, because it was a wasteland just a few years ago. It can become a wasteland again just as quickly because nobody really wants to live there, they just moved because the arithmetic looked right. Now it looks wrong, and nobody wants to buy your house.

Edit: I almost mentioned DiscoStu's point too. Same point: our housing is less disposable. It has more intrinsic value.

[DiscoStu]

The UK won't have a mortgage crisis like the US because.....

...in the US you can hand your house keys to the bank, even if your house is worth less than the mortgage that's secured on it, and walk away owing nothing.

In the UK you'll be pursued until you sell a kidney.

[TheBigYinJames]

The UK won't have a mortgage crisis like the US because.....

Our economy is different.

Yes, it's worse, with much less of manufacturing base than the US. We do have a lot more social housing that the US, however.

[BlasterBates]

Second wave of foreclosures coming

this could get expensive for the US tax payer.

OK now as an exercise complete the following sentence:

The UK won't have a mortgage crisis like the US because.....