Analysts: Half of Mortgages Underwater By 2011

[marmar]

Reuters via Comcast:



About half of U.S. mortgages seen underwater by 2011
By Al Yoon, Reuters


NEW YORK — The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.

Of prime conforming loans, 41 percent will be "underwater" by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties' value, up from 29 percent, it said. .........(more)

The complete piece is at: http://www.comcast.net/articles/finance/20090805/BUSINESS-US-USA-HOUSING-DEUTSCHEBANK/

[babylonsister]

1. What if something positive happens in 2010? Have they factored that in? nt

[TexasObserver]

2. He's wrong. We're going to keep interest rates low for the next two years.

The GOP naysayers are putting out this bullshit to try to slow down the recovery, which is on track. In fact, the recovery is ahead of schedule. These right wing shills know that if the economy is obviously in recovery this time next year, it's all over for the GOP in the November 2010 midterm elections.

One key is the FED keeping interest rates low. If interest rates are low, rollovers on loans will not be a problem.

FYI folks - these are the same jackasses that spent all of 2008 telling people to keep their money IN the stock market. While the DOW fell from 13000 to below 9000, these guys told everyone to stay in. They haven't been right yet.

[marmar]

3. I wish I believed that.....but this recovery is a chimera, IMHO.

I hope I'm wrong.

[joeunderdog]

4. My brother in law is a straight shooting financial planning guy who says

that there is another major shoe to drop in the next year or so in real estate, perhaps bigger than the first. It has to do with commercial real estate, but it will effect home sales too. He has plenty of money because he truly knows how to read numbers and he is renting instead of buying property now.

I trust his judgment.

[dysfunctional press]

5. all those empty strip malls have mortgages too...

and half-empty office buildings still have to make full-size payments.

there is definitely another shoe to drop...and maybe they're hoping that the swine flu will be virulent enough to bring unemployment down to a more respectable level. :shrug:

[TexasObserver]

6. Did he sell off when the DOW was at 13000 in January of 2008? I did.

Did he buy back in when the DOW was at 6700 in March of 2009?

I did.

This isn't my first major recession. I've been investing successfully for 30 years. When I bought in, the DOW was under 1000.

Your brother in law is repeating the same mantra the investment counselors have been saying for the past six months. They were wrong in 2008. They've been wrong in 2009. And they'll be wrong in 2010.

[joeunderdog]

9. I can appreciate your institutional suspicion. I'm with you there--it's a racket.

But he thinks in smaller terms on his investment strategy, never holding on beyond a 10% loss on anything. He's into bonds now and doing well. I made a whopping 45% on a short-term bond that he bought for me and cashed out last week. He is a self-schooled broker who just turned pro and was first in his class nationally with Edward Jones. He was good enough to be written up in IBD years before he went for his brokers license.

Again, I feel the same way you do about all the talking heads like Kramer who are just pumping and dumping, but I trust that my brother-in-law is not getting his information from TV.


BTW--congrats on going with your guts and your brain on your investments.

[TexasObserver]

10. He sounds like a guy with a good plan.

Investment takes a strategy. Mine is to bet on the DOW, and then try to focus on what it will do.

There are other strategies, but mine has worked for me. Others should tailor their own to match their needs and personality.

I don't mean to be bashing your Brother in Law, but the institutional brokage firms - who have missed every call the past couple of years - are touting the "shoe yet to drop" theme. They've been saying it since the markets began their recovery a few months ago. The rise of the DOW from 6700 to 9200 represents about a 40% gain. Many investors have missed that, because major brokerage houses are saying "second shoe to drop."

And I think part of their happy talk last year and their gloomy talk this year were functions of their politics, not their economics. These guys simply cannot believe that Obama is leading a recovery. That's why they wail about the deficit, wail about the national debt, and wail about the loan rollovers the next 18 months. All of these things are potential problems, but here's the question: Is the economy turning around? I think it is.

We won't likely see jobs pick up until the end of this year, IMHO. I like the signs for the future, and think we will see the economy on a positive trend upward in 2010.

Sorry if I was too adamant earlier.

[flvegan]

7. Good thing Deutsche Bank isn't in the car loan business or they'd shit themselves.

One of the worst foreclosing lender/trustees pissing itself because they may be more in the red exposure-wise. So long as folks pay the loan, then upside-down doesn't matter. In the new car biz, the borrower is upside down day one and stays there until roughly the last year and a half or so of the loan.

[Expedite Trucker]

8. I just hope they are wrong