What’s that gurgling sound? According to First American CoreLogic, a real estate research firm, some 7.5 million homeowners nationwide are underwater–that is, they owe more on their mortgages than their homes are current worth. They suffer from “negative equity,” to use the uninteresting and pointlessly euphemistic technical term. Another 2.1 million are nearly in that situation, with their homes worth less than 5 percent more than their mortgage totals. These totals don’t mean that all of the homeowners involved with face foreclosure, but it puts them at greater risk of it. A whopping 47.8 percent of the outstanding mortgages in Nevada are underwater–making the state number one in percentages of such perilous mortgages. Arizona and Florida each have 29.2 percent, all legacies of particularly large price bubbles in the pre-credit crunch years, while Michigan has 38.6 percent, mainly because the economy has been lousy there for quite a while before the current panic. Other states with high percentages include California, Georgia, Ohio and Colorado. States with the fewest underwater homes include New York, Hawaii, Pennsylvania and Montana. On the other hand, JP Morgan has unveiled plans to help some mortgage holders avoid foreclosure, as many as 400,000, who hold about $70 billion in loans. Among other things, the banking giant will temporarily suspend foreclosure proceedings while it introduces financing alternatives, and eliminate negative amortization going forward. It’s been clear for a while that the recent spike in foreclosures hasn’t been good for the economy, but now it could be dawning on banking industry that more foreclosures aren’t going to be good for banks. Rep. Barney Frank (D.-Mass.) is steamed that banks are using cash from the bailout for acquisitions, executive compensation, or mattress-stuffing. “I am deeply disappointed that a number of financial institutions are distorting the legislation,” he said in a statement today. Congress may share some of the blame for this situation, since it passed the bailout on the fly last month without checking the fine print, but the banking culture of I-want-my-millions-come-hell-or-high-water bonuses is also looking more publicly piggish all the time. As expected, the European Central Bank and the Bank of Japan both moved to cut their key interest rates in the wake of the Fed’s decision earlier this week to do the same. The Frankfurt-based ECB has committed to cutting its benchmark rate to 2.5 percent by next spring, according to Bloomberg. Meanwhile, the Bank of Japan cut its key rate to 0.3 percent. Next stop, zero. Interest-rate cuts might make Wall Street a bit happy (the DJIA is up 1.6 percent by about mid-day), but Main Street probably doesn’t care. Following two months with no change in consumer spending, such spending fell by 0.3 percent in September, according to the U.S. Department of Commerce, as wallets and purses snapped shut nationwide. All together, that makes 3Q08 the worst quarter for personal spending since the 1970s.<\/p>\n","protected":false},"excerpt":{"rendered":"
What’s that gurgling sound? According to First American CoreLogic, a real estate research firm, some 7.5 million homeowners nationwide are underwater–that is, they owe more on their mortgages than their homes are current worth. They suffer from “negative equity,” to use the uninteresting and pointlessly euphemistic technical term. Another 2.1 million are nearly in that…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003886056","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n