Discussion on So, It Wasn't the Subprimers After All... Wha

Schumpeter Reincarnate Joined: 24 May 2008 Posts: 50055

http://mandelman.ml-implode.co.....bout-that/

Dud? Joined: 07 Jan 2009 Posts: 19

Here's a recent study that questions why policymakers are so intent on helping homeowners:

http://www.areuea.org/conferen.....ml?id=2133

Here's part of their conclusion:

We have shown that in Southern California ... Most of these households had experienced very rapid house price growth during their tenure as homeowners and had already extracted most of the accumulated appreciation through either refinancing or junior lien borrowing. Total equity extracted exceeds $300 million. Even after these foreclosure events, the un-leveraged return on investment for these property owners is very high: roughly 40% over their holding period. If borrowers financed these purchases with 100% financing, of course, the returns on investment are infinite. Why such borrowers should enjoy any special government benefits such as waiver of the income taxation on debt forgiveness or subsidized loan modifications to reduce their borrowing costs is at best unclear.