Wealthy may be next in line in U.S. home crisis

[Amerigo Vespucci]

Source: Reuters

"The next wave of problems will come from prime borrowers who bought too much house or borrowed too much against it," said Michael van Zalingen, director of home ownership services at Neighborhood Housing Services of Chicago. A "prime" borrower is one with good credit.

Real estate agents warn that some high-income borrowers have already been forced to sell or leave their homes and more will follow. Especially those who used their homes as ATMs, withdrawing cash via home equity loans.

"For those who utilized home equity loans for five to ten years to finance their lifestyle, the chickens are coming home to roost," said Chicago-based real estate agent Marki Lemons.

"The concern is people who have borrowed a large percentage of the equity (in their homes)," Kelly said. "Now the value of their homes is falling and they can't refinance."

Read more: http://www.reuters.com/article/domesticNews/idUSN1530426720080117?feedType=RSS&feedName=domesticNews

[gateley]

1. There was a CONDO in Seattle selling for $6,000,000. In the "old days" it might

have sold for that -- the price has dropped to $3,950,000. That's a BIG drop. And Seattle is supposed to be on of the least hardest hit areas in real estate.

[Demeter]

2. We Are a Nation of Debtors--And the Creditors Are Being Brought to Their Knees

There's a kind of rough justice swiftly falling upon the world--those who gathered will find themselves holding worthless paper. Those who spent will find themselves forced to redistribute the wealth by force or by law. It's going to be an entirely different world in a few years--a world reborn of collapse of insupportable, unrecycled waste and hoarding.

[ClintonTyree]

6. The creditors will never be hurt that much....

we'll have another taxpayer bail-out, and of course interest rates on credit cards and their associated "penalties" will skyrocket. It will always be the little guys that shoulder the burden, the people who can least afford it. But we HAVE TO keep the lenders solvent because everything "trickles down", right? :eyes:

The new bankruptcy laws, written by the credit card industry, make sure that the "little guys" will be paying off THEIR debts in perpetuity. Not so for themselves. They'll gather 'round the public trough once again and gorge themselves on taxpayer dollars. The "free market" forces have NEVER been free. Everything is stacked in Corporate America's favor and I don't see that changing. Ever.

[WCGreen]

3. I guess that is why the House and Senate bail out included writing

off losses up to $ 2,000,000 in the most recent bail out the rich bill...

Under the old law, you had to recognize the money that was written off when your mortgage defaulted unless you were under bankruptcy protection...

Now, the write only starts after you register a $ 2,000,000 dollar default...

This just rewards, again, out of control speculation on the part of the upper class...

Jesus H. Christ...

And nary a whimper about this in the MSM...

[xchrom]

4. most of the sub-prime loans went to people with good credit.

that's a pretty important piece to leave out -- yet this article does.

[sendero]

5. Now there's a group of folks..

... that I can muster no sympathy for whatsoever.

[ClintonTyree]

8. But the government will.....

we can't have the cream of the American crop exposed to any risk, can we? :eyes: No, that's a peril reserved for the poor American little guy. It's the American Golden Rule: them that have the gold make the rules. The rich aren't allowed to fail. They're immune to the economic virus that's eating up the American middle class.

[Warren Stupidity]

7. Not wealthy.

The wealthy are not financing their lifestyles by drawing equity out of their homes. The wealthy do not have to bother with that sort of financial idiocy as the wealthy have income producing assets that support their luxurious lifestyles without having to get loans on their homes. As usual, the middle class peasants are being portrayed as the wealthy in the distorted class narrative of the Bullshit Media System.

[NashVegas]

9. How About The Apparently Wealthy?

I wouldn't call someone pulling down 100k + a peasant, you know? But they are being affected, thanks to their own stupidity.

The apparently wealthy would be those who've been trading up all along, using debt as a ladder. Making enough income to have access to great wealth, if not own it outright.

I live in a neighborhood where 1960s-1970s ranch-style homes are being torn down in favor of building & selling homes, galore, to the apparently wealthy.

Meanwhile, apartment rents are going up to historic highs here. Speculating companies are buying complexes, individuals are buying duplexes, adding cement and granite counter tops, then jacking the rent by hundreds.

[bagrman]

10. Was it so long ago that we forget the crash in SA that require....

a wheel barrow to take enough cash to the grocery store to do the daily shopping. This is a year long train wreck. I have a building materials business and it's defiantly slowing down. Which is the start of the trickle down.

Latr

[NashVegas]

15. I Hope You Socked A Good Portion of Previous Profits Somewhere

To be used for rainy days ...

[wishlist]

11. Wealthy do mortgage homes for tax advantage, lost wealth in stock market

I have wealthy corporate exec relatives making million dollars/year salaries who own multiple homes and when interest rates bottomed out a few years ago, consolidated all of their credit card and mortgage debt into refinanced mortgages on primary residence to save on taxes. These same relatives lost half a million or more each during stock downturn of early 2000's, but have stayed in stocks, hoping market would rally and restore their losses, but unfortunately they have seen their wealth stagnant disappointingly with the downturn in real estate and now stocks.

[SlowDownFast]

13. THAT is the real truth of this story. n/t

[Warpy]

12. Those aren't the wealthy, they're the last vestige of a middle class

They're the upper middle managers, the district sales managers, the doctors, the reasonably successful lawyers, successful small business owners, and a lot of people in higher level government jobs. The could have been part of the "have some" class had they not thought of their living spaces as investments that would do nothing but increase in value.

I had to stop watching HGTV and all the house porn. All those poor deluded saps, wondering what their houses were worth so they could borrow against the paper equity and put those granite countertops in the kitchen or that spa bathroom into the little room that was once used as a nursery. Those poor fools are the ones who are likeliest to lose and lose big as their wages are cut, their equity disappears completely, and all they have left is service on debt that affects their ability to feed and clothe themselves.

Good luck to the lot of them. They're going to need it.

[SlowDownFast]

14. Once more, Warpy tells it like it is. n/t