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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (34839)	7/8/2009 9:31:31 AM
From: Spekulatius	Respond to of 78729

Madharry - Up to 26% of U.S. homeowners who stop paying their mortgage may be doing so intentionally, not because they can't make the payments but because they don't want to put money into a house that's worth less than what they owe. That percentage is probably understated in bubble areas. I know a few who stopped doing payments and went into foreclosure. I actually advised some friends to do so because their house is hopelessly under water and they were paying 50%+ of their disposable income (which has gone down due to economy) for housing. Since this is not a sustainable situation, I advised them to do a shortsale which they are going right right now. Renting (a smaller house) will only consume <30% of their income. Loan modification in this case would nor work, unless it is combined with a reduction in principle. Anyways examples like this taught me that every loan that is underwater enough (15%+ of he housing value) is subprime no matter what the credit scores of the borrower.