This interview prompted Beth, a WCCO viewer, to write to Real Estate Matters asking:
I saw you on Esme Murphy’s program this morning regarding the housing market. One thing I would like to know, but never seem to hear about, is how many of the homes that are underwater, are homes where the homeowner took out second mortgages or refinanced to collect and spend the money that, during the boom time, was the equity in their homes. I hope this housing “prop up” does not go through. Things need to be sold for what people are willing to pay. As a homeowner who has faithfully been paying my mortgage for years, I do no want to pay for other people’s mistakes and speculations.
Your question reflects excellent timing. American Corelogic, a national real estate data firm supporting mortgage service companies, recently released a national report on the estimated number of homeowners ” under water” in relation to the value of their home and the amount of their mortgage obligations. Minnesota mortgagors aired well in this analysis with only about 16 percent under water. Florida and Nevada mortgagors were 50 percent or more underwater.
The homeowners that comprise the underwater category were buyers that purchased homes at the peak of the market (first quarter 2007) or who used their home equity like an automatic teller machine (ATM) and refinanced or used home equity lines of credit for purchases.
I like your conservative and prudent style–hopefully more consumers will share these traits in the future.
Good hearing from you.
Dr. Tom Musil