Nearly 26 percent of all home owners were equity rich in this year’s third quarter, but a floundering 9 percent were seriously underwater, according to Attom Data Solutions.
An equity rich property is one in which the owner owes 50 percent or less of its estimated current value, and Attom says there are 14.5 million of them. On the other hand, more than 4.9 million owners had a combined loan balance secured by their houses that was at least 25 percent above their current value.
Which raises the question, why do underwater homeowners continue to make their mortgage payments when it will be a long time, if ever, until their houses are worth more than they owe? Or better yet, until their houses are valued at 10 percent above market, because that’s the generally accepted break-even point after paying your selling costs?
That’s a question the New York Federal Reserve Bank asked underwater borrowers in a survey this spring. And nearly 87 percent said that, “no, absolutely not,” have they ever considered not making their payments. Never even entered their minds. And 6 percent said they’ve considered throwing in the towel but never did. None actually stopped.
So, why didn’t they stop? Nearly 78 percent said they liked their homes and didn’t want to give them up. And 1 in 4 respondents said the cost to move to another house was just too great.
Nearly 1 in 5 respondents worried that stopping their house payment would negatively impact their credit score, and almost 17 percent were afraid the lender would not only take their house, but also come after their belongings. Yes, losing a house will definitely affect your credit score, but I know of no lender that wants your car, TV or personal effects.
Meanwhile, some 15 percent have a moral problem with stopping, and 11 percent held the belief that eventually, their places would be worth more than their combined debts.
If you are counting, respondents were allowed to select multiple reasons.
Scams, scams, everywhere a scam. The latest: A call threatening to shut off your electricity or other utilities unless you pay off a past-due bill.
You know you’ve paid, but you can’t afford to lose your heat, air conditioning, water and so on. Besides, the guy on the line sounds so convincing, so believable. But you can’t afford to trust him because it’s not true.
Here, thanks to the Federal Trade Commission, is how to handle such calls:
-- Keep the guy on the line while you check your receipts. If you’ve marked it paid, hang up.
-- Don’t give out your banking information by email or phone. Real utility companies won’t ask for it, and they won’t make you pay up that way as your only option.
-- If the caller demands payment by gift card, cash reload card, wiring the money or cryptocurrency, take it as a red flag. Legit companies don’t demand one specific form of payment, the government’s consumer watchdog agency says. And they don’t accept cards or bitcoin.
The FTC has shut down three outfits that sell fake documents to people who are applying for a mortgage or other products and services.
Homebuyers need evidence of their employment, income, bank accounts and so on. But if you buy fake pay stubs, tax forms and the like online and give them to a lender to support your application, you are committing fraud and could be prosecuted. Besides, most lenders these days confirm electronically what you state on your application.
While on the subject of scams, check out Fireball Approves (www.fornoscams.us), a website that helps consumers identify all sorts of rip-off schemes before they become a victim.
I haven’t used the site myself, but it claims that renters of residential properties and vacation homes can obtain confirmation of ownership, a phone number and an email address within 48 hours. No personal information is needed from the customer besides their name, email and phone.
Fireball Approves also offers a vetting service for vacation rental property owners that can be inserted into their advertising or property listings to gain the confidence of a potential customer. And it offers business verifications to assure that contractors are bonded, licensed and insured.