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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (17342)	2/15/2004 11:56:13 AM
From: Elroy Jetson	Read Replies (4) \| Respond to of 306849

The Fed has access to information on all home loans from banks. In this area they miss nothing. They also attempt to estimate what they believe to be the small volume of private loans, based on periodic surveys. In spite of their efforts, you believe the Fed is not counting a significant number of private loans. This is not very encouraging. This means the indebtedness of American home owners is being seriously understated and household financial stability is indeed resting on a slender reed. The Fed believes 39% of homeowners own their homes free and clear. You, on the other hand, believe that many of these people actually have home loans the Fed is unaware of. So the number of home owners who own their homes free and clear is less than 39% - possibly much less. Very grim indeed. The Fed believes that home owners with a loan against their house have on average 23% equity in their homes. You are certain there are additional home loans which the Fed doesn't know about. So you know the average equity, which home owners have in their home, is less than 23% - possibly much less than 23%. Perhaps home owners have only 10% equity in their homes on average! Hopefully you can acquaint us with how large this under-reporting problem really is. If you're correct, even a modest downturn is going to cause massive loan defaults in the housing market. It's unfortunate that the Federal Reserve has chosen not to avail itself of your expertise.