Housing prices to take another huge dive

As I wrote back in 2006, the impending collapse of the housing market was imminent. I predicted that it would brink down the entire economy, considering housings importance to the whole financial system.

Well the housing market did collapse, but the financial system did not collapse, yet.

Back then in 2006, I had no idea of the drastic, immoral and probably illegal methods the Fed would continence by the banks to avert such an event.

The Fed has printed Trillions of dollars to prop up the financial system. Wall st is inflated with government money used to purchase stocks. Bank's balance sheets are top heavy with funny money. The Fed and their cronies in the Obama administration have allowed the banks to hide the true, imploded value of their assets, especially the toxic mortgage backed securities.

I had said in my 2006 article that Joe and Mary Sixpack's ability to pay their mortgage payments were the key to the house of cards the fraudsters in Wall st and the banks had built and it still is.

However, with the drastic decline in the value of their homes, Joe and Mary have little to no incentive to pay their mortgages if the value of their homes is less than the mortgage amounts.

This is a problem I believe has been disquised and lied about. Ten years ago, the average homeowner had 50% equity in their home. At the height of the insanity, average equity had fallen to 30%.

As a result of the housing crash so far, home prices have fallen by 30% and more in certain hard hit areas. Tell me that only 25% of homeowners in Nevada, Arizona, Florida and California are underwater. Perhaps 25% at most are Above water!

The Banksters have been successful in blocking investigations into the rampant fraud that underlined so much of the housing markets, on originations and now of the foreclosure side.

But now it is all coming to light with the investigations into who owns the mortgages and therefore has the legal right to foreclose the mortgage.

Here are a look at some of the possible scenarios:
Investors in securities may demand Put Backs, refunds of the investors money paid for the security based on their fraudulent representations on the underlying securities;

Homeowners suing to get their money back who have made years of mortgage payments to an entity that had no right to those payments

Successful home owner defenses against foreclosure of their homes because of the bank's inability to prove their ownership of mortgage

Title companies refusing to guarantee title to new lenders and borrowers

A collapse of the Trillion dollar securitization game.

Short to medium term, look for housing prices to nosedive as the market grinds to a halt and deflation in the broader financial markets takes over, despite another Trillion or so of QE2, ("Qualitative easing" by the Fed in 2011.)

However, look for gold and silver to sky rocket in the face of the resulting financial chaos. In fact, I expect that you will be able to buy a home with a 1,000 OZ bar of silver, during this period, just like you could in 1982!

Long term, look for ginormous inflation when the Fed figures out how to beat deflation. Then the complete collapse of the financial economy!

Underwater? Stop Paying Your Mortgage, Stupid!

University of Arizona law professor. Brent White agrees with my recommendation to those who owe more money than their home is worth! (Underwater)Stop Paying Your Mortgage, Stupid!

I have been arguing for more than a year as I saw people's lives being destroyed by using their retirement funds, college funds, etc to pay on a mortgage on a house that is worth less than the loan. Invariably, when the funds ran out, they lost the house anyway, leaving them totally destitute. This makes no financial sense. Corporations and businesses don't play by these rules. Case in point: Maguire Properties Inc., one of the largest commercial landlords in California, walked away from seven prime office buildings in Los Angeles and Orange counties last year, defaulting on loans worth more than $1 billion. "The deal no longer made financial sense!"

Tishman Speyer walked away from a $3 Billion mortgage on 110 buildings in NY's Stuyvesant Town after property values fell to half of the purchase price.

Sunshine Properties, a major hotel owner let a string of Hyatt's, Hiltons and other marque properties go back to the lender when their values fell.

Morality? Please! What would Ben Bernanke, or Tim Geitner do if they were in such a dire situation?

We are under no obligation to adhere to any moral standards that are different from the banks who made the immoral loans that brought down the financial system. They knew what they were doing, but only saw the dollar signs generated by the lending frenzy.

Then, when the inevitable defaults happened, will they write down the balance of your underwater mortgage so that you can pay it off? You mean the banks taking a real loss, are you kidding? They even strong armed the government, (you and me) to pay off their paper losses! They have totally forfeited any moral claims on borrowers, in my estimation.

As a former bank loan officer myself, I will show you how to stay in your home for 12-36 months without ever making an additional mortgage payment, allowing you to recoup some of your lost money so you can accumulate a nest egg for your future.

So, if you are underwater in your home, get over it. Think of the money, like a business person. The house has been lost due to the financial schenanigans of the banks. Save your money, prepare to find a cheaper rental. It is even possible that you will be able to buy another, similar or better house in the future at a much better price.

Your credit may be bad for 7 years, so buy that car or whatever before you do this but think about it, do you really want to be the one with the highest credit score among your homeless mates living in a card board box under the viaduct?

If you would like to know how you can stop paying your mortgage and remain in your home for 12-36 months, contact me.

Bill Young, Personal Financial Consultant