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Underwater Homeowners May Swim Freely

Pundits argue that when homeowners owe more on their house than it’s worth, they find it hard to move to find jobs. One economist challenges the very foundation of their claim.

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An eviction team member removes a child's mattress from a house during a home foreclosure on Oct. 5, 2011, in Milliken, Colo. (John Moore/Getty Images)

Prevailing wisdom has it that homeowners who owe more on their mortgages than their houses are worth -- known as being "underwater" -- are forced to stay put because the property is too difficult to sell. So people who would otherwise relocate -- say, to find a job -- are "tethered to their homes." It's a theory touted by prominent New York Times columnist Thomas Friedman, Harvard economist Lawrence Katz, and regularly makes appearances in the media.

But according to economist Sam Schulhofer-Wohl at the Federal Reserve Bank of Minneapolis, they've all got it backwards: underwater homeowners are actually more likely to move.

In a forthcoming paper, he argues that the main source of empirical evidence for the established view is flawed, because it ignores a substantial number of movers.

Evidence for the tethered-to-their-homes thesis comes largely out of a paper from the National Bureau of Economics Research (NBER) whose authors hail from the Wharton School of the University of Pennsylvania and the Federal Reserve Bank of New York. The paper analyzed a national sample of homes by U.S. Census Bureau called the American Housing Survey. Since 1985, Census Bureau interviewers have tracked over 60,000 housing units across the country, returning every two years to record who lives there. If the Census records a house as occupied by its owner, then two years later there are four possibilities: the house is occupied by the same owner, a different owner, a renter, or nobody (the house is vacant.)

In the original NBER research paper, all entries recorded as renters or vacancies were dropped from the data, so that only homes with a different owner were counted as a "move." The authors explained that this was done on purpose, because housing mobility has traditionally referred to "permanent" moves where an owner sells a house and never returns. Using this measure, the researchers found that underwater homeowners were almost a third less likely to move.

But if you owed more than your home was worth and were desperate for a job, maybe you'd rent while you left to try greener pastures, or you might even ditch the house altogether, especially if the bank was going to foreclose on you anyway. So Schulhofer-Wohl analyzed exactly the same data, but he included properties that were rented or vacant.

"I thought, let's count as moves all the times where someone moved out and rented their house, or moved out and left it vacant, which could happen if they were foreclosed upon." He found that if you included all the renter or vacancy cases, people with negative equity were actually more mobile than those with positive equity.

Schulhofer-Wohl thinks that only counting moves in which a person leaves and never comes back is unnecessarily strict. Since the Census survey gathers information every two years, "the distinction between temporary and permanent is not just a matter of leaving for a month on vacation," said Schulhofer-Wohl. "These ‘temporary' moves really have some duration to them."

Now, neither counting method resolves a larger question: Is the overall unemployment rate affected by whether underwater homeowners can move to look for work? Pundits assume a connection. The data suggests it's not so simple.

The assumption goes: some towns are currently hiring, others aren't. If job seekers were perfectly mobile, they could leave at the drop of a hat to find a job anywhere in the country. (So laid-off app developers from Silicon Valley could go work for a software venture starting up in Anchorage, Alaska). In a world of perfect mobility, localities with low unemployment could suck workers out of areas with high unemployment, which would lower the nation's overall rate of unemployment.

But according to Schulhofer-Wohl, the vast majority of moves are local -- people moving close by to where they already live -- so most moves don't alter overall unemployment. Most people aren't moving from Silicon Valley to Anchorage, but rather from one side of the valley to the other.

Joseph Gyourko, co-author of the NBER paper and a real estate and finance professor at the Wharton School of the University of Pennsylvania, points out a more depressing reason that mobility might not affect unemployment. There could be so much unemployment that even if an underwater homeowner couldn't move to take a job elsewhere, an unemployed person near the job would snatch it up. "That's all you need for this not to have a big labor market effect," he said in an email.

I was shocked by similar results in an informal discussion around the office.  The subject of underwater mortgages came up, and the unanimous response (engineers in their 30s to 50s, owning decent homes that they’ve been paying mortgages on suburban houses for probably about ten years on average) was that they’d absolutely walk away as soon as they owed more than they could get by selling.

I assumed it was political rhetoric at the time, but if the empirical numbers match the consensus, I guess not.

That strikes me as really weird.  People don’t abandon cars on the side of the road when the resale value is less than the remaining payments.  If they did, no car would get driven off the lot!  And while I rent, it seems to me that a plot of land and a house is more useful in the long term than a car.

Walk away from the house and trash your credit, then move to a new location, try to rent somewhere decent with that bad credit? And wait till the new prospective employer does their background check and finds your trashed credit rating? Right on man!

I would also posit that…the amount of equity invested in the home has a very significant weight on the homeowners ability to short sell or walk away from the property.

There is more to non-mobility of workers than simple economics. We invest more than money in a certain location - connections with community, family, and friends are completely ignored by these studies.

Before the collapse I was offered a position in Seattle which required moving from Oklahoma. Despite the increased salary. etc, once you weigh all the options it made much more sense to stay than move. All our children/grandchildren are within an hour, selling our property here, cost of living, etc.

I have a home that was just appraised at $260,000 and I owe $475,000.
My payments are $3400 each month. I work 3 jobs to pay this. I am tired. My family and some friends say I am delusional (stupid).

There are no good answers. It seems the bank would at least adjust the rate back down to something reasonable. No luck. The question is: How long can I hold up this heavy load?

There are lots of opinions but no real good answers.

I am trying to talk my husband into walking away now we own a condo and are under water through no fault of our own the economy has destroyed all equity in the place and the fact is walking away does not trash your credit as much and as long as everyone thinks.

There is a solution in some cases.  I was able to refinance an upside down mortgage using the HARP program.  It is disappointing that more people aren’t aware of this program.  I refinanced with Wells Fargo using it and closed about 1 month ago.  It is not a modification and doesn’t have any negative impacts to your credit.

If you have good credit (one late or less in the last 12 months and no late payments in the last 6 months with good credit scores) and your property is upside down you can refinance with the HARP program. The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.  The loan to value needs to be between 80%- 125% (I think the upper cap may have been removed but this is what it was when we refinanced with this program) of the property value. If you don’t already have Mortgage Insurance none is needed. This is a no appraisal full document loan. The fees should be around $3000 before any impounds if you wish to have them (we refinanced in CA).

To see if your loan is owned by Fannie Mae or Freddie Mac go to their lookup pages.

Fannie Mae’s Website at http://www.fanniemae.com/loanlookup/ . For Freddie Mac you can do the property look up at https://ww3.freddiemac.com/corporate/ .

More information can be found at:
http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx

I hope this post is able to help someone else who wasn’t aware of this option.

walk - always the right decision !

you dont owe anyone anything if the numbers don’t work - corporations are people -  ask Romney - corporations walk - so should you !

as to credit status - many people have credit issues and they get rental agreements - all day long - people make assessments about people not paperwork -

the property will not come back in your life time - the banks committed fraud - in any cyclical market that would have come down 10-30% in value anyone can deal with -

depending on the market - this is a systemic market change - nationally has come down 45% to70% due to the pervasive level of Bank Fraud - end to end - the borrowers have nothing to do with the conditions - they didnt create: the phony documents / phony notaries / phony signatures / fraudulent inducements /  fraudulent transfers / MERS / misrepresented syndications / cut and paste mortgage apps / bogus appraisers———> the banks did !!!

throw the property into the cesspool they created and let the banks figure it out - buy it back for 30-35 cents -  sooner or later

Frank Francin

Jan. 11, 2012, 3:02 p.m.

Hey David…......you got it right.  You are swimming, the others are aimlessly treading water…waiting for someone in authority to give them direction.  Sorry folks, but Mom & Dad are gone…...you had better face facts. 

Completely new rules prevail for all property owners. But we have been so conditioned by the “rules” we grew up with, that for us to change is near impossible. 

The lenders have the ability to save the entire US economy.  Foreclosure is not the answer, REFI and Loan-Modification is the solution…...

Without the housing market intact, the economy will NEVER repair itself in our lifetime. 

Hey Bankers…...either reduce the rate & extend the term…...or eat the loan.  And don’t black-ball borrowers with negative credit reporting, they will go go elsewhere for a future loan…....that is how they found you, another lender told them “no”......you said “yes”. 

So say “yes” again and REFI or MODIFY all loans…........YEP, all loans.  Slash your T&C’s and save yourselves.  Or keep playing by the OLD RULES and follow the dinosaurs into extinction.  Your ball…...

Is it just me, or was the whole point of this article to make it appear that the mortgage-backed securities pyramid scam had no lasting impact upon the American worker?

Am I getting ready to see articles demanding that “high finance” - Wall Street and the banks - be permitted to go play again ‘cuz they’re not really responsible for any of the hardships the American people now face?

Richard McDonough

Jan. 11, 2012, 4:56 p.m.

Another nearly pointless and not very useful piece by the once promising ProPublica.

Much like Cash for Clunkers, I’ve know more people that have used the crisis to upgrade to a larger home nearby for low-cost, while in good standing on their current home, then foreclose or short sell the current home!  For every 1 person in know in real trouble worthy of help, I know at least 2 that did the above.  BTW, I’m an emplyed engineer continuing to pay on my 30-year fixed, 1800sqft, with a LTV of 149%.  But welcome March, HARP here I come!  Yet I know the reality is, the people that did the bait-n-switch will have clear credit and profits in hand before I’m even close to breaking even on mine.  Heaven forbid I suffer a job loss or other financial crisis down the road.  Something wrong here.

I don’t think the methodology captures a significant fraction of the “lock-in” of having an underwater mortgage. My wife and I refi’d in 2003 at the peak of the market here in almost-Detroit just to get out of PMI and drop half a %, and our home was appraised over $200k then for our very boring 30-year fixed mortgage. It wouldn’t sell easily for $100k today. We’re both IT professionals old enough to have had some experience with job insecurity over the years but fortunately we also were able to maintain our own safety net to some degree. When my employer sent my work down to Mexico in 2008, I was dropped into the free-falling Detroit job market with a house that had no market value because there really wan’t a housing market in my neighborhood at the time, just a lot of houses going empty. As far as I can tell, there hasn’t been a real 6-figure home sale in our square mile (an easy unit, given the street layout…) since 2007. 

What that meant was that as someone who was not on the verge of needing to default on my debts (and probably go bankrupt as a result, since Michigan law lets lenders go after mortgage deficiencies)  I tightened my belt and spent down some of that safety net for 6 months while only considering jobs that would not force me to move. I have a professional network that popped up a handful of unsolicited offers in other states, but I declined them all. After 6 months of looking, I finally landed a new job that I love, but it has definitely meant foregoing income to avoid having to realize the evaporated value of my home. Had I seen a way to manage moving, I would have done so. Instead I helped to contract the economy.

I don’t know how economic research could find and measure the anecdotally real phenomenon of ex-upper middle class people muddling through and hunkering down with underwater mortgages in circumstances where but for the pathological real estate market they would have been active participants in the rebalancing and recovering of the economy. I know a lot of people who have switched their lives from leveraged excessive consumerism and a constant eye on their career opportunities to a focus on holding on to whatever work they have while doing everything they can to de-leverage their lives. That may be morally satisfying to see, but it is terrible for the economy.

There is another very critical factor keeping people from just quickly walking away from underwater homes homes for a job.
People have seen that they can stop paying the mortgage and save up the money for an eventual move. People are getting two years of “free rent” because of the huge backlog of foreclosures.
I believe people just see it as getting back at least some of their down payment.

ok. here is my understanding.HARP is not designed to help the truely struggling homeowner: ie : behind on payments, housing ratio > 31% of gross monthly income, poor credit etc.

unless and until a bold initiative such as reducing the principal on EVERY Fannie, Freddy, Va and FHA loan, ACROSS the board,by 20% coupled with an interest rate reduction to 4% ( or current rate ), the government will continue to piss in the wind.

don’t even underwrite it.no application .no tax returns.no pay stubbs,no bank statements, no nothing.simply send a letter to every homeowner stating that ” next month your new principal balance will be X, your new interest rate will be X and your new monthly payment will be X.
if you choose not to accept this offer please check the box below and return this letter.
thank-you for being a valued customer.”

consider the following:
loan amt = $ 250,000.00
interest rate = 6.5%
monthly P+I = $ 1,580.20

reduce principal by 20% to $ 200,000.00
reduce interest rate to 4 %
new monthly P+I payment = $ 954.80
savings = $ 625.40 / month

in other words a 20% reduction of principal coupled with a reduction of interest rate equates to an approx 40% reduction in monthly payment

think about the immediate and positive impact this would have on not only every homeowner,every community,every state but the entire economy as a whole!

in every recession since WW2 the housing industry has led the way to recovery.

i would appreciate you views and comments re the above

If your 20% principle reduction and 4% rate plan was to be tried where would the money come from?
The scumbag lenders have already got back their money, and a profit, by selling the loans to the government. Are you suggesting that the government take the hit?
That might mean that our worthless union thug supported President might not have enough money to give the General Motors UAW extortionists another $10 billion gift.
Anyone who buys a Chevy is a fool.

richard,the banks have to take the hit.i don’t know how to structure that.they took TARP and gave the finger to every homeowner.they do not deserve any more from us.perhaps some sort of a clawback would work.fannie and freddy have already cost us over $ 150B and some project that to double.in no way am i suggesting that the government take the hit.the problem is that the government is in the banks pocket.if i steal $ 100.00 and get caught and my punishment is a $ 25.00 fine i have just been rewarded $ 75.00 for stealing.that’s what looks like is happening.i wish that congress and the treasury would grow some balls.

Anna:  I agree with you….I was also able to refinance my home through ASC and Wells Fargo.  They basically just gave me a lower interest rate for the current amount owed on the home (not what it’s actually assessed at presently).  That dropped my payment by about $800/month.  Mel needs to try that himself…it took me a year of constant calling, faxing in paperwork, refaxing in paperwork, and faxing MORE paperwork, but it finally worked.  My house is still basically underwater (we owe about $600,000 and it’s been currently assessed at about $485,000), but I love my home; it’s close to my job; and I’ve lived here since my parents purchased it in 1954.  I see no reason to move, and I never actually worried about the equity or the home being an investment.  To me, it’s the place I live, sleep, and enjoy my family….and that’s the most important.

Woodrow Wilson

Jan. 12, 2012, 2:37 p.m.

Somehow, coming from The Fed, a PRIVATE BANK doing everything in its power to support bank bondholders, isn’t exactly reassuring.

The Fed, CONgress and The President fail to realize for any recovery in housing, it will have to involve haircuts, FOR BANKS. Instead, they float ridiculously short-sighted plans or initiatives that don’t address the fundamental problems affecting housing. In some cases, like HAMP, it made things even worse as far as fraud/foreclosures.

Throw in inventories not on the market, sitting on bank books as to not register massive losses, the fraud and looting will continue. As long as The Fed, in conjunction with CONgress/Treasury, fail to make banks eat their losses (even if it collapses them), no program will work.

Like a poster above, people underwater are not going anywhere, they can’t. The only people that can in fact move are those with nothing else to lose, walk and file BK. I’m sure with a BK, it will look great to a potential employer and or property owner looking for someone to rent.

Unlike The Fed, CONgress, and those that enable this fraud, the majority of Americans live in a real world, not a theoretical one.

@Didi Paano:  You’re in a “decent” position inasmuch as “someday” home values may return (rather assumes something is done about deregulation and inequitable free trade, but…who knows) and your 1954 date indicates “established neighborhood”.

The ones most to be pitied are those who are underwater in newer neighborhoods where the rate of foreclosure is higher - meaning that they may well be surrounded by many more abandoned homes than you are.

That would be a horrid situation; if they do manage to keep their home, will even a Congress that actually represents the American people and so supports the United States of America be able to help them eventually recover their original purchase price (let alone the additional interest investment) in a neighborhood…even a city…destroyed by past Congresses, Wall Street, and banking?

Yesterday, January 11, A story appeared in the New York Times under this headline: “Unemployed Mortgage Holders Get Extension on Payments.”

The story says that Fannie Mae and Freddie Mac have just announced their “plans to extend their existing programs so that unemployed borrowers can defer part or all of their monthly payments for up to 12 months while they are out of work.”

According to the news release,
“The moves come after the Obama administration announced last July a similar program for loans backed by Federal Housing Administration insurance, as well as mortgages serviced by lenders that are participating in the government’s loan modification program.”

I’m scratching my head. Is this in fact true? My mortgage company was “participating in the government’s loan modification program,” yet this is the first time I’ve heard of any such agreement. The lender never informed me of any such thing, and - in fact - as soon they bought my mortgage (not from me), they started calling me BEFORE it was due, from another continent, to say “this is an effort to collect a debt.”

In the absence of any public notice about who to call or how to take action—or for that matter, any cessation in the daily assaults on the part of the ‘misery industries’ (collectors, attorneys, and other assorted bullies), I see no reason to pay this so-called news any mind.

My hunch is that it’s just another mirage, fronted by the Bank-Government Industrial Complex and designed to conjure up a semblance of helpfulness while silently and (at all costs) protecting its cash flow. Keep in mind that all the settlements under discussion will end up benefitting only two parties: the U.S. Treasury and the (financial) stockholders.

The people who are losing everything, who are drowning in grief and shame while they and their children freeze in the cold? In this game - and it IS a game - they are the marks, the dupes, the ‘collateral damage.’ Government of, by and for the people” didn’t perish from the earth, per Abraham Lincoln: it was sold.

Electric Loan Officer

Jan. 13, 2012, 12:35 a.m.

I agree with the fact that people are more likely to leave their homes if they are upside down however the more “affordable” the home is for the owner the better chance they will stay. I think that the Harp 2.0 program is a fantastic concept and makes alot of sense, whether or not the servicing lenders will put up a bunch of red tape could be the million dollar question. Only time will tell as this rolls out.

More about Harp 2.0

-Justin, Electric Loan Officer

My business tanked in 2009. My wife works at a large (50+bil$/yr) for 20+ years now. We were underwater and applied for HARP through our mortgage co. Turned down for HARP. HOWEVER our mortgage company modified our mortgage in house and slashed our payment by 55%. We are keeping our home and are nowhere near underwater by agreeing to share 25% of equity when house is sold or re-fi’d.

Are lenders becoming more pragmatic?

@Ernie:  Necessary information before anybody would dare attempt to answer your question is…how big is your bank? 

Is it a community bank, and so still vested in the American people?

A regional bank - one whose interests may still lie with the community but are fading as their executive suite dreams of being bought out?

Or a big national bank?  One of those so renowned for being hulking predators who see the American people only as prey?

I have long sense begin to think of the government as a large committee for the management of business affairs rather than having any relation to the needs of its citizens.  This seems to also be playing out in the indebted countries of the Eurozone where repaying debts is more important than healthcare and other essential services to citizens.  I find it laughable that upside down banks are being refinanced ( rolling over their debts) while they sneer at consumers desiring the same thing.  Wonder how many citizens would ok a loan for this group if they had to answer the same types of questions that consumers do.  Not many would be my guess.

bruce rappaport

Jan. 13, 2012, 10:39 a.m.

Even with the best rates, I’d would rather have my home valued for it’s real current value rather than use the old fantasy price. I don’t get it. Do the authorities think home prices will re-inflate to prior levels in our lifetime? What’s the point of forcing so many millions of people to be burdened like this? It looks to me as another gift to the banks on the shoulders of the populace. I think in resolving this problem consideration should be given to the non Fannie and Freddie banks. Do we have to have winners and losers amongst equally fraud free mortgagees?

Thanks Didi,

I have had a new conversation with the bank and submitted the modification paperwork requested.

I, like you, love my home but will walk soon if the bank chooses not to respond. I am not trying to take atvantage of anyone. I was sold a bad loan and cannot continue working 3 jobs any longer. This is not living.

I hope the bank has gotten the message that this is not business as usual. Things have changed.

Making the assumption that abandoned or foreclosed homes represent a move to greener pastures is faulty on its face.  The two are in no way intrinsically linked.  To also call this “mobile” is also wrong in so many ways.  Nobody wants a foreclosure on their record.  this type of “mobility” is hardly desirous, and adds nothing to the concept that people are tied to their upside down house.  You act as if these people have a advantageous position as opposed to people whose homes are not upside down.

Your argument is wrong in so many different ways it’s impossible to enumerate them all here.  There’s nothing positive or “mobile” about a rock and hardplace position.

Here’s what I worry about: families like Didi’s who, when they retire, must keep paying relatively large mortgage notes with dwindling retirement savings. Social Security doesn’t come close to what they need. Heaven forbid someone gets sick and can’t work when they’re 70. So many people incorrectly viewed their homes as an investment and now they are facing a future for which they are unprepared.
Miscellaneous thoughts: find an investor who has been successful and get them to help you figure out how to buy investment properties. We’ve got several trust even in these markets two have doubled in value, no kidding. This is an awesome time to take control of your future rather than relying on “financial advisors” who give everyone the same advice: (“buy mutual funds! Diversify! Blah blah”). I blew them off in 2007 and bought something I could understand (as opposed to gambling with the stock market—too volatile!). Now I’m the landlord cashing those rent checks and having fun rehabbing a house here and there, and making the neighbors happy that seine has done such a nice job fixing up a formerly trashed house! Everybody’s property values go up in my neighborhoods!  Take some of your IRA funds and put down 20% on a foreclosed property and resell or rent it out. Take care of your future by being proactive today.

Keep in mind that many homeowners are underwater in large part due to a second or “junior” mortgage. 

Homeowners are utilizing the protections of bankruptcy court to reduce and in some instances wholly eliminate the second mortgage. 

I think abandoning a home eventually has a terrible impact on a community. 

Alex Frias
http://www.DocsToWork.com

I completely agree.  As I said, nobody wants something like that on their financial record.  It also has the effect of pulling the plug on a bathtub, with the bathtub being the neighborhood.  It brings everybody’s home value down.
I also agree, that some of these are in a bad spot because of second mortgages.  Mortgages given to them by banks using hyperinflated home values.  My ex was a victim of this.  A slick mortgage broker approached her, sold her on the idea of a second mortgage.  She’s from Thailand, so her understanding of what she was getting into was incomplete, and at times just wrong because of lies he told her.  Thank god he’s in prison now.  But not before she lost the house, which we had to buy back so she could stay in it.  What was lost was almost 20 years of principle, up in smoke.  The home was not overvalued, property values in that neighborhood have risen, and continue to rise, even throughout the depression.  It’s just that much harder to sell a home in that neck of the woods, because banks will now disallow any mortgage on home bought below county valuation, even if the house is owned outright by the seller.
As far as the rampant overvaluation ramped up by crooked mortgage brokers and assessors, and tacitly accepted by the banks, the brokers and assessors have been going to jail(at least in my state), and the banks are going to have to accept some losses for their complicity in these games.

Michael: Regarding your idea about reducing everyone’s mortgage principal and interest rates across the board… the head economist at GOLDMAN SACHS proposed this in—- I kid you NOT—January 2009, just BEFORE Obama’s inauguration. 3 years later, here we sit, and I think, “What? Treasury and the Fed are FILLED with Goldman people, you couldn’t take advice from just one more Goldman person?!’

In other words, you’re right. Exactly right. People need to hit the reset button, the BRS (big red switch) for the economy to right itself. Banks have been assisted (bailed out) in hitting their reset buttons, but not people!

I have been in the Residential and Commercial Real Estate for 25 years in the State of Michigan. When I began Selling mtg ratres were over 13.5%. They have never been higher in 28 years and as everyone knows they have declined all the way down to the bottom of 3.5%. I believe that where many preceive equity as savings into down payments plus equity appreciation carried into the new home purchase (keep in mind up until the 2006 the ave person was trading/moving every 4-6 years) in fact many in the retirement states Florida, Arizona and Nevada/Las Vegas counted on this moved equity to carry them into their retirement years based upon the younger generation purchasing their home for more money then they did. The question that is not addressed in this “Move” or swim freely is what what be our true equity position for the masses of retirees during the 90"s moving forward if Interest Rates stayed constant at a healthy 7%-8% rate? Property appreciation at that interest rate would have been keep in check with income levels. If you were to truly track this therory I can only imagin that we never came out of the recession of the 70’s when mortgage rates were at an astounding 23% and the Dow was at $2000.00. In fact it you were to reseach the Banks Lobby in the the early 80’s back they they went to congress to get the “Garn Act” Passed. In those days we did not need the banks high mortgage rates to purchase a home one could simply (no pun intended) assumed the homeowners mortgage. This was very simple transaction in fact one that truly held Real Estate appreciation tied to a savings rate where the purchaser of someone home in the 70’s owed $15,000.00 with a 30 yr mortgage of 4% and payments of $300.00/ month and at the time of sale only had 20 years left on the note, could simply sell their home and mortgage with it by taking the difference of the balance plus the new market value call it $20,000.00 leaving a $5,000.00 difference/equity. Very Simple, No mortgage costs, No Mortgage application, review nothing. In fact it was so simple the population did not need the banks so in 1981, the banks lobbied and obtained the ability for the goverment to interfer into their contract with the then borrwerer and institute a new demand feature called a due on sale clause, forcing all new homebuyers to go to the bank and get a new mortgage, paying their fees and now reaching the elite status of a public utility company. In this research one could argue that quite possibly had we stayed on that type of consumerism we could truly have a cost structure in America today that would still be more affordable to do business in America! Garn Act simply gave the banks the power to enforce a Due an Sale clause.

can’t wait

Really want to get depressed?  Find out why FREDDIE MAC IS NEVER GOING TO REFINANCE YOU…
http://www.propublica.org/article/freddy-mac-mortgage-eisinger-arnold

Freddie Mac invested BILLIONS against their own clients.  They are NOT going to let people refinance to a lower rate, period.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

More »

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