Mortgage Madness

Frequently I use this blog to vent about things I find perplexing or things that go around in my head. Ken was my sounding board and often we sorted out newsworthy items with their pros and cons as well as issues about which we were concerned. (He was my BF, ya know.) So today I will talk to myself in this blog about the housing "mess."

Since this housing mess in which we find ourselves (as a nation ) is a first I often can not help but wonder how it will all "shake out." A relatively high percentage of folks in our country (approx. 27%) find themselves living in and paying for a home that is worth considerably less than their mortgage. These are referred to as underwater mortgages. The housing bubble burst and housing prices have fallen substantially and continue to fall. In cities such as Phoenix homeowners find themselves with roughly 70% of their mortgages underwater. A city closer to us with a high number of underwater mortgages is Atlanta with 54% . One cannot help but wonder what eventually will happen in these cases. In one article I read it was indicated that one couple interviewed paid 375 K for a home that was now valued at 150 K.

Who really wants to pay off a mortgage of 350,000 on a home that today is only worth half that much? When you think of it in that context it is easy to understand why some folks have bailed. It also seems almost unfair and definitely unfortunate for homeowners finding themselves holding an underwater mortgage. For that matter what bank wants to have a mortgage out / owed to them for which the collateral is only guaranteed for fifty percent of worth. Or did I say that backwards. Whatever!!

Hey, isn't this like buying a brand new car whose value goes down greatly when you drive it off the new car lot???? And holding the loan on the car as it decreases in value???