The Mortgage Meltdown Continues

The bad news regarding housing values and foreclosures continues. Because of the major downturn in property values in the areas of the country where prices increased so much during the boom many homeowners are finding themselves owing more on their mortgages than their houses are worth (upside down). There is a great expectation that many people in this position will simply walk away from their mortgages and houses. This phenomena will not just affect sub-prime loans, but even fixed loans to quality buyers.

Due to the continuing bank liquidity problems, mortgage money, and money to borrow for any reason is becoming more and more scarce. Some might face the scenario of needing to move to another city due to their employment, and unable to sell because of the difficulty of a buyer finding mortgage money, and being upside down on their own mortgage, will simply walk away and make their career move without bothering to sell.

The shakeout in the home/mortgage area will continue for some time. The good news is that those banks that do survive will return to more prudent policies in lending money. The easy money days are over. People will have to make significant down payments in order to buy a home. The banking industry is good at learning from their mistakes, and it will be a long time before they will be able to forget the nightmare(s) that they are going through right now and will be going through for the next couple of years.

Get more good news about the housing sector and a game plan for the future from Steve's Value Picks.

by The Freshman |  05/14/08