YOU KNOW I hate that term ... "BUT" ..  WARNING - WONKISH POST!!!  BUT ...

When Martin Feldstein speaks I listen.  Feldstien for 2 decades headed the NBER (National Bureau of Economic Research) - the group that MAKES the decision in the U.S. about whether we had a recession or not.

From McClatchy news (the Chinese have clamped down again on the web so I can't get right to a link yet):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"There are now 12 million homes in the United States with a loan-to-value ratio greater than 100 percent. That's one mortgage in four. The aggregate amount of that is some $2 trillion," said Feldstein. "If you look at the median (midpoint) loan-to-value ratio in that 12 million group of underwater mortgages — mortgages with negative equity — the median loan-to-value ratio is 120 percent."

 

 

 

 

 

 

 

 

 

 

 

 

That means about 25 percent of all U.S. mortgages are exceed the value of the homes the mortgages are financing. In the case of half the homes that are underwater, homeowners are paying a mortgage that's now 20 percent higher than the value of the home.

That's bad — but it's likely to get worse.

A recent report by First American Core Logic, a real-estate data firm in Santa Ana, Calif., estimated that as of Sept. 30, 7.5 million mortgages, or 18 percent of all properties with a mortgage, had negative equity. The group thinks there are another 2.1 million mortgages that are within 5 percent of going underwater.

Together, these two categories account for 23 percent of all properties with a mortgage.

SCARY, no doubt!!  I included a bit more than normal because no link is available.  Feldstein made even more dire predictions, which the article made plain were not agreed to by many, but Martin had the numbers at his fingertips for years. 

FUTHERMORE, Feldstein was Ronald Reagan's chief economic advisor, not one I would expect to look on the dour side, as much as some others.  As I so often say here on this blog ... We Shall See!!