<p>"Twenty percent of Bay Area homeowners owe more on their mortgages than their homes are worth, according to a study being released today. This dubious distinction has entered the American lexicon as an all-too-familiar term - being underwater.</p>
<p>As home values continue to plunge, the real estate valuation service Zillow.com said that 20.76 percent of all homes in the nine-county Bay Area are underwater. The rate is much higher than the national average of 1 in 7 homes, or 14.3 percent. That’s because the Bay Area - like most of California - was a classic bubble market, where buyers in recent years paid overinflated prices for homes that now are rapidly losing value in the market downturn."</p>
<p>Where is personal responsiblity and where is corporate responsibility in this mess? People making really, really dumb decisions and lenders ready to take advantage of greed and blind ignorance - how much of each???</p>
<p>Back in the early 80s, as relative newlyweds, we bought our first house with very little down with an ARM. I remember watching our “negative am” very carefully, even though there was very little possibility of it ever kicking in because we had a 6 year balloon and we were moving in 4 years. We had no dependents, and 2 jobs, although DH lost his job soon after we moved, and went through a series of temp jobs, leaving eating beans, forgoing maintenance on the house, and having some of the worries these people are experiencing. As naive as we were, I don’t think we were stupid enough to take on a mortgage that didn’t build us any equity at all - even with the negative am, we were building some equity, and could have refinanced had we stayed and lost the amoritization gamble.
I understand they didn’t expect this, but man, I wouldn’t have wanted a house that badly, to take on that kind of risk with a family and a “seasonal” job.</p>
<p>cangel - you are right. there has to be personal responsibility here.<br>
anyone who is not seeking a second job, has not canceled their cable, internet and cell phones should not expect assistance. tighten up, work hard and pay the mortgage.</p>
<p>Whats even more disturbing is the fact that more and more foreclosures are voluntary. People who have not lost their jobs and still have the income to pay their mortgages are choosing to walk away from their obligations. This is prevalent in some parts of CA and FL where home values are down 50% or more. People who purchased a $400K home in the last few years with little or nothing down have an incentive to walk away and rent an equivalent home for less than half the monthly expense. Their repossessed home is then auctioned and brings an even lower price, thus providing more incentive for other people to do the same. Yes, their credit is ruined for seven years but cash wise they know that they will be far better off. It’s the mortgage holder and the taxpayer that gets stuck with the loss. This is a rapidly growing problem and nobody knows how to stop it.</p>
<p>My nephew bought a home in the bay area - he and his wife with another couple, the only way they could afford it. We all told them not to do it, it would ruin the friendship and the market had peaked, but he insisted. They are no longer friends with the couple and just did a short sale and are now renters in homes they coule afford alone at new prices.</p>
<p>Very sad, he is a bright guy and would not listen to family advice, the hype in the media there was overwhelming. He does take responsibility for making the problem</p>
<p>Well, I am looking for a home in socal, I am also considering the Bay area. The agents tell me there are a lot of buyer interest and there are competing offers. Also the prices are still pretty steep if you ask me.</p>
<p>^^ They’re not all underwater. I doubt ‘most’ are. It’s probably closer to dstark’s article which indicates only a minority are. Anyone who’s held their mortgage for more than 5 years or so and hasn’t tapped it to buy themselves a boat or RV or college tuition or something should be above water.</p>
<p>People take risks and make mistakes. Nothing new about that. I think that it is a shame that there are those out there who are deciding to walk away from their houses and take the 7 year credit hit and come out ahead case wise, but if that is their best option, then so be it. With the way the defaults are hurting everyone so much, there is an incentive for the government to make this a less attractive option and to help those who are truly unable to pay those mortgages as well. Though people scream that it would be rewarding those who made that risky decision to overextend, the alternative seems to be more harmful to the nation and economy as a whole. I am not really looking for fairness in this situation, but a way to solve the problem. Unfortunately, helping any group of people is unfair to those who did not get help with similar or worse situations. Does not meant it is not the best move to give out the aid. </p>
<p>We and other members of our extended family are helping out a member who is in trouble financially. Yes, it is a result of a lot of bad decisions topped with bad luck. One very resentful sibling is furious because when she had problems some years ago, no one offered her any help even though she had less blame in her situation. But that is not a reason not to help in this situation. Equity is not what we are striving to achieve. There is a problem here, that some of us are choosing to address right now and organizing a solution which just did not occur when she had her problems.</p>