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Upside-down mortgages

I want to point out this one tiny factor that crops up in every single news story about the recession, housing prices, gas prices, inflation, taxation and probably Obama.

Upside-down mortgages. For those who are blissfully ignorant, an upside-down mortgage is when someone owes more money on their mortgage than the house is “worth.”

In other words, Mr. and Mrs. Nervous J. Panic decide, at the very height of the housing market, to buy a house for $500,000. A year before, the house was $410,000, and 5 years ago, it was $250,000 - but no matter, Mr. and Mrs. Panic are happy to buy the house for $500,000.

They’re enthusiastic, in fact, because in 5 years, the “value” of the house has doubled. Now that’s an investment anyone can bank on. In another 5 years, they’ll be sitting on a million dollars!

And it is a nice house. After all, it’s half a million dollars, ipso facto.

But then a year later, they go to refinance their mortgage because they’ve just discovered that their adjustable rate mortgage has somehow adjusted itself higher. That’s strange. Well, no matter… Continue reading Upside-down mortgages…

Freedom Slate ‘08

Trevor Lyman’s Break the Matrix project is setting up a Money Bomb for Liberty Candidates nationwide. More importantly, Kurt Wallace is interviewing each candidate so that you can find out more about them. Some of our bloggers have already been interviewed, and you can listen to them after they are aired on Break the Matrix TV at the Freedom Slate ‘08 site.