patrick.net

Refi of any declining value RE does not makes sense,not just jumbo loans - it only makes sense to walk out,holding out for the return of golden year values would not be wise.

Is anyone in the fortress areas underwater?

PS: I'm a renter, don't flame me. I'm amazed at how prices keep going up in the fortress. They're in their own little world. This is a serious question.

agst says

I'm amazed at how prices keep going up

No they are not going up.

ptiemann says

'their own little world' - that's also what some perma-bears here live in.

Actually, I'm somewhat of an anti-debt / perma bear too. But the government and every one else has the back of borrowers (atleast those that are strong enough under some stress). A prolonged tech recession would seriously sting the fortress areas around the SF bay for sure, but that is not looking likely. However, 30 years is too long to gamble - that's what most people seem to be unconcerned about when they grab those loans. The government came by this time and someone will come by the next time too, but there will be collateral damage and you've got to make sure it's not you.

Looking at the numbers in the article's examples, it doesn't look like these people were putting 20% down. I hardly call that "buying what you can afford." It sucks for them that they are stuck with higher rates (which are still pretty low, historically), but it is what it is. When you take a jumbo loan, it should register that you are borrowing a lot of money and that it doesn't conform to the same rules as smaller ones...hence "non-conforming."

Why not allow folks who are underwater, or everyone for that matter, access to money at zero percent interest?

Here we have folks paying 6.75% to a bank that is borrowing from us at near zero percent. So who is continually bailing out the banks, and paying their bonuses? Folks like the couple described in this story, and also the rest of us.

What clearer example does anyone need to see who is running this country?