More than 11.3 million homeowners — nearly one-fourth of all Americans with a mortgage — owe more on their loan than their home is now worth, according to a report released Tuesday by FirstAmerican CoreLogic.
As long as
- real wages for the working class decline
- good paying middle class jobs are outsourced for cheap labor
- government refuses to reign in “casino financiers”, instead of rewarding them
- government policy is controlled by corporations
- lobbying remains legal in government business
- “bailouts” are given to corporations, with no commitment to bring jobs back, but rather encourage more layoffs (Chrysler, GM etc) and more outsourcing.
- governments undermine labor siding with, and publicly negotiating for corporations
- banks and financiers write economic policy
- deregulation continues unabated
- free trade is abolished, and fair trade instituted
.. there will be no meaningful recovery. The wealthy and the elite will grow richer on the backs of the middle class, if one remains.
The other issue is subprime mortgages. When subprime mortgages were getting popular, many state governors stepped in to stop it. In return local state banks would associate themselves in partnerships with federal banks so that state laws would not apply to them. When states appealed to the Federal Government under the leadership of Bush, directive would come from the government to allow these banks to continue their ponzi practice. Florida, participated willingly in this ponzi scheme so of course when it falls they are one of the worst affected.
11.3 Million Homeowners Underwater on Mortgage
WASHINGTON (MarketWatch) — More than 11.3 million homeowners — nearly one-fourth of all Americans with a mortgage — owe more on their loan than their home is now worth, according to a report released Tuesday by FirstAmerican CoreLogic.
More than 10% of people with mortgages owe 25% more than their home is worth.
The number of underwater mortgages increased by about 620,000 from the third quarter, the firm said. Another 2.3 million mortgages had less than 5% equity in their home, which could be wiped out if home prices fall further.
Jayan Dhru, Standard & Poor’s global head of Financial Services Ratings, says U.S. banks are still in recovery mode as they manage the credit cycle while reducing leverage and risk. Reforming the banking sector will have unintended consequences on the broader economy.
In the fourth quarter, national home prices fell 1.1% compared with the third quarter, Standard & Poor’s reported in a separate report on Tuesday. See full story on Case-Shiller home price index. You can read the full story from MarketWatch news.