Mortgage Crisis Hits Million-Dollar Homes
Fox News Business
"That giant ATM you've been living in has just shut down," said David Wyss, chief economist at S&P in New York. "Consumers are in debt and we've been living beyond our means for some time."
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
For those on the frontlines of the growing U.S. mortgage crisis, these are the early signs that the explosion of subprime loans made to mostly poorer borrowers is reaching higher ground. The damage is hitting homes financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are a notch above subprime and a step below prime.
I think it’s safe to say that the scope of the problem has not yet been fully revealed. I think I can also say that many people will be surprised at the depth of the current mortgage cancer.
There were young professionals who saw an opportunity to move up from a half million dollar home to a one-plus million dollar home. They got caught at the top of the market with a depreciating asset and a teaser ARM that they were sure they could refi out of and into a low fixed rate loan later before the reset.
No Dice!
Still there were others who were playing the flipping game at the higher end of the price scale and got caught with a property or two too many when the trend turned negative.
Because no oversight entity keeps track of private home sales like the SEC tracks the stock market, no one can really say how bad the situation really is. My guess is there will be more auctions of multimillion dollar homes to come and a new class of people we will call 'The High Income Poor'.
Vern
"That giant ATM you've been living in has just shut down," said David Wyss, chief economist at S&P in New York. "Consumers are in debt and we've been living beyond our means for some time."
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
For those on the frontlines of the growing U.S. mortgage crisis, these are the early signs that the explosion of subprime loans made to mostly poorer borrowers is reaching higher ground. The damage is hitting homes financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are a notch above subprime and a step below prime.
I think it’s safe to say that the scope of the problem has not yet been fully revealed. I think I can also say that many people will be surprised at the depth of the current mortgage cancer.
There were young professionals who saw an opportunity to move up from a half million dollar home to a one-plus million dollar home. They got caught at the top of the market with a depreciating asset and a teaser ARM that they were sure they could refi out of and into a low fixed rate loan later before the reset.
No Dice!
Still there were others who were playing the flipping game at the higher end of the price scale and got caught with a property or two too many when the trend turned negative.
Because no oversight entity keeps track of private home sales like the SEC tracks the stock market, no one can really say how bad the situation really is. My guess is there will be more auctions of multimillion dollar homes to come and a new class of people we will call 'The High Income Poor'.
Vern
posted by Vern Wichers at 11:26 AM
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