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Laurie Goodman and the Amherst Securities Group tries to determine the size and scope of the housing problem:

This article summarizes the size and scope of the housing crisis, making the point that if governmental policy does not change, one borrower out of every 5 is in danger of losing his/her home. A crisis of this order of magnitude requires both supply and demand side measures. On the supply side, a successful modification is critical. This will require principal reductions to re-equify the borrower. The moral hazard (strategic default) issues must be addressed by first recognizing that this is an economic issue, not a moral one. Second liens must also be addressed. As supply side measures alone are likely to prove insufficient to address a crisis of this size, we discuss demand side measures to increase the buyer base.

The full report, if you can track it down, is here and worth reading.

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Source:
The Housing Crisis—Sizing the Problem, Proposing Solutions
Amherst Mortgage Insight, October 1, 2010

http://www.politico.com/static/PPM170_101006_amherst.html

Category: Credit, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Mortgage Market Breakdown by Equity/Delinquency”

  1. Goodman was on CNBC a week ago talking about this, too.

  2. Robert M says:

    This is the realization of what the financial institutions are and the fact we need them anyway:
    http://www.youtube.com/watch?v=upvZdVK913I

  3. gordo365 says:

    Love their conclusion #2.

    If governmental policy does not change, over 11 million borrowers are in danger of
    losing his or her home (1 borrower out of every 5). Politically, this cannot happen.The government will attempt successive modification plans until something works.

    Politically, this cannot happen. … until something works. OK.
    But in reality – it could happen. Maybe nothing works.

    Tons-o-folks lost their property during the depression because they couldn’t pay their mortgage or property taxes. Why couldn’t tons-o-folks loose their property now?

    Just thinking…

  4. Joe Friday says:

    Goodman: “…supply side measures alone are likely to prove insufficient to address…”

    …Anything.

  5. taz8 says:

    If a mass program for principal reduction were to begin, everyone would want to participate, including those that are current on their mortgage. This will lead to a massive amount of defaults.

    If the government creates a program for principal reduction or cheap refi, it would need to include all mortgages in the country, those current, those in default, and new buyers about to purchase a foreclosed home. If the benefit is not equally available, many more will default.

  6. taz8 says:

    Put people in foreclosed homes that can AFFORD THEM. Auction off all foreclosures, starting bid $1 CASH only. All sell to the highest bidder. Problem solved.

  7. louis says:

    The value of being a homeowner has been sewn into the fabric of this nation. It is time for the people who represent the citizens of this country to demand that banks re-write these loans.

    Morrisey sums this crisis up in one song starting at 1:00 mark

    http://www.youtube.com/watch?v=V-8AR7XQ2K4&feature=related

  8. rktbrkr says:

    The banks will insist that the US take the bulk of the prin. writedowns because it was US fault for not properly regulating them. This transfer of prin writedown will be mixed in the goo of law that the banks will draft for congress

  9. The Pale Scot says:

    What is Amherst Mortgage’s reputation. A quick google seems to imply they were a MBS creator, how are their securities fairing?

  10. Rescission says:

    “The moral hazard (strategic default) issues must be addressed by first recognizing that this is an economic issue, not a moral one.”

    Could not disagree more.

  11. [...] Why some sort of systematic resolution to the foreclosure crisis needs to happen.  (Tech Ticker, Big Picture) [...]

  12. victor says:

    I’ve done a back of the envelope calc. on how much the Gov would have to cough up to sort out this mess. Call it loan modification if you want: the family (3 people) gets to stay put, that’s 27 million souls. There are 11 million houses at risk but I knocked that down to 9 million. The average mortgage is say $275,000 but courtesy to Uncle Sam it is “reduced” to half to be paid over 30 years at some minimum APR. So, the Treasury prints 9,000,000 x 275,000/2= $1.25 trillion, pays it to the banks (something it is very adept at), adds it to our national debt and keeps Elizabeth Warren’ s boot on their necks from now on. Warren is one of my few, very few heroes in Washington, I pray she succeeds in reining in the financial sector which needs to shrink, shrink, shrink. If my (naive) numbers are way off, please correct me.

  13. BILL says:

    Goldman / Amherst , two peas in a pod . Gubmint should like the tax on living in a home without paying mortgage . Prove strategic default!! More incursions into citizen privacy as financial matters go . Amherst is biased to extremes against troubled homeowners . Bottom line , you can’t have every American in a home – Period !! Thanx to Clinton and Bush for this fantasy that is ruining our country . Keep printing Benny Boy – ZIRP rocks !!!!! Not!!