Mish’s links to the scoop (PDF) and quotes:
More than 15.2 million U.S. mortgages, or 32.2 percent of all mortgaged properties, were in negative equity position as of June 30, 2009 according to newly released data from First American CoreLogic. As of June 2009, there were an additional 2.5 million mortgaged properties that were approaching negative equity. Negative equity and near negative equity mortgages combined account for nearly 38 percent of all residential properties with a mortgage nationwide.
66% of the mortgages here in my State of Nevada are under water – with “near negative” bringing it to nearly 69%. That’s a lot – and its why the bottom here in Nevada is no where in sight. This is a State which is getting crushed between a collapsed housing market coupled with a heavily distressed tourism industry (more and more casino operators are reporting losses and indicating possible bankruptcy…if a casino is going broke, you know you’ve got some problems). How do we fix this?
Essentially, we need to reorganize our housing system as if it were going through bankruptcy. Do the best we can to determine the real value of the houses, adjust the mortgage amounts to fit and then just start building our way out of the mess by hard work. And don’t get me wrong, it means the $130,000 I’ve put in to my house is gone for good (or bad, as the case may be). Everyone bet wrong, everyone has to pay the price – well, except for those wise people who bought pre-boom and didn’t sell or refinance their house during the bubble…they’re sitting pretty on equity and deserve it for being wise.
While the mortgage crisis has hit worst just a few States, the fact remains that housing prices are dropping almost uniformly around the United States and it appears that no State has less than 15% of its mortgaged residential properties under water. It will be very painful to get out of this, but any attempt to put the matter off or hide it under various government and federal reserve schemes will just put off the day of reckoning, and make it worse when it finally arrives.
A look at the cold, hard facts is necessary – and the courage to ruthlessly cut to the chase and set things to right. We won’t get that from Obama, Reid, Pelosi and their Democrats, so we’re going to have to do it ourselves starting in 2010.
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