Thursday, April 29, 2010

3 to 5 years.....

April 28 (Bloomberg) -- The U.S. housing market won’t recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri.

“There’s another big leg down and the question is how long does it stay,” Ranieri, chairman of Ranieri Partners LLC, said during a panel discussion today at the Milken Institute Global Conference in Beverly Hills, California. “You can’t have much of a rally when you’ve got this big overhang.”

Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc. Unemployment was 9.7 percent in March, unchanged for a third month, according to the Labor Department, and a fifth of mortgaged U.S. homes were worth less than their loans in the fourth quarter, reported.

‘Leave Them Alone’

Larry Mizel, chief executive officer of Denver-based homebuilder MDC Holdings Inc., said the federal government should allow homes to be foreclosed on and sold at reduced prices to new buyers.

“The best thing they can do is leave them alone,” Mizel said during the panel discussion. “We now have affordable housing. The best thing, in my view, is just let the process take care of itself.”

Buyers have no Moral Duty to lenders

As a result of the housing collapse, many Arizonans have seen their homes lose half of their value. Many owe several hundred thousand dollars more than their homes are worth and are unlikely to dig out of their negative equity hole for decades. To compound the stress and anxiety, when they've called their lender to work out a solution, they've discovered that their lender won't even talk to them about a loan modification or a short sale as long as they are current on their mortgage.


K said...

Buyer's don't have a moral duty to lenders? Then I guess I don't have a moral duty to the credit card company or the local grocery that lets me charge stuff on credit. I promise to pay them too and sign a piece of paper. So what's a piece of paper?

The fact of the matter is that this isn't capitalism at all - the state has decided on when and how much money you have to pay back when you go bankrupt. And right now the penalties are pretty lenient.

Of course, the banks are also being bailed out behind the scenes, which means that when Mr. defaulter walks, people like you and me - who don't default on loans and don't engage in bubble investments end up paying for their free ride with our tax money.

So for all you honest folks who did the right thing, invested conservatively and always pay your taxes I have one word.


golfer_X said...

You are mixing apples and oranges. Credit card contracts are not the same as mortgage contracts. A mortgage contract uses the home as collaterat. Sure you sign a promise to pay but the consequences of not paying are clearly spelled out (that bank takes the house back). Credit cards are not so black and white. If you don't pay the bank can pursue other ways of getting there money. The point of the article is that a mortgage is a legal contract no a moral contract. It's perfectly legal to excersise your option to not pay and let the bank have the house back.

theY said...

Back in the heyday I think many of these banks were counting on people to default and then take the house and essentially flip it. At least that's what I was thinking the genius bankers plan was. Boy was I wrong!

So who the hell bought a house after April 30th? I'm dying to see what happens with the training wheels off. I for one am taking the wait and see.

Teacher said...

I don't think walking away from a home is unethical. You signed a contract to buy a home that both you and the bank signed in good faith. Neither you or the bank expected prices to drop in half but they did. Now that it has you are simply following the law and the stipulations of the contract. Just because the law and contract say the bank has no recourse doesn't make it unethical. If you lied on a mortgage app or never intended to pay the mortgage when you bought it is different. That's fraud. Otherwise, walking away is just business.