OsamaHusseinIslamObama 08′ (D-World)
(the terrorist choice)

Many didn’t qualify for conventional/fixed-rate loans during the mortgage boom but had adequate income to make the payments on an ARM and now, even if your credit is okay, your equity may be negative or close to negative, making it so you don’t qualify for a conventional loan since you generally need a 90% LTV for a fixed rate re-fi. Fannie Mae and Freddie Mac tightened their lending guidelines and many of the sub-prime lenders have long since gone out of business. Of course, there are still the problems of people having bought more house than they can afford. I, at least, bought quite a bit less house than I could afford. I did that right along with being one of the rare people to find a home under market value, but I almost F’d myself on the ARM thing. Like I said, there would have been no way at the time for the average joe to predict the extreme tightening of the lending guidelines coupled with negative equity.

Foreclosure bail-outs won’t help if the people can’t afford the payments anyway.

At the time, my credit was about as high as you could get it and I still had to finesse the agent to get the house I did. Plus, I set my expectations for my house accordingly. I didn’t run out and buy a bunch of furniture, cars, or any other “keeping up with the Joneses” items.

By that same token, I know some fairly knowledgeable people who take their finances seriously and saw 25-30 year olds running out and buying $300k+ homes. Everybody thought home prices just go up forever and given enough time they do.

We just happened to have that perfect storm of overaggressive lenders, stupid debtors who are living off of revolving credit, high gas prices, and far too many houses built by cheap illegal labor.

Want your house to be worth something? Tear down every empty house you find. That’s just supply and demand.