Government: Let’s Screw More Homebuyers!
Don’t trust the government folks. They are heavily invested in bubble-blowing, and are desperately attempting to keep the game going — and don’t care if you get destroyed in the process.
(Reuters) – More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.
That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.
It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.
Please understand how this actually works.
When you take out a loan that goes into negative amortization, no matter what it is, the negative amortization portion unless backed by someone’s actual hard capital (that is, it’s a “hard money” loan) is pure inflation in the monetary system.
This acts to drive up prices for commodities and destroy your purchasing power.
That is, you not only are underwater but at the same time your ability to service the debt is intentionally and inextricably impaired at the same time.
This is an intentional act undertaken by (in this case) the government and (in the previous case) by the subslime and “ALT-A” debt merchants.
It is not an accident, it is not an incidental and unforeseen consequence, it is the intent of the entities who are making the loans they know are unbacked by anything.
Since all money in modern economies is debt-backed (in the case of the US all except for coins) and a balance sheet must always balance any time you increase credit outstanding by more than the collateral value that backs the loan you are increasing the monetary supply in relationship to GDP. That is inflation and inexorably causes your cost of living in real terms to rise. When wages are not constrained economic slippage causes you to lose ground. When wages are constrained then you literally fall off the cliff as your cost of living goes up while your wage base goes down — that is your personal leverage goes up while your ability to meet your obligations is damaged or even destroyed.
These are intentional acts and it’s bad enough when private parties do it and sucker you into foolish decisions. When governments do it this is an outrage and one that should be responded to by a complete refusal to cooperate, acquiesce and further endorse the blatant theft of your economic well-being for the purpose of looting conducted by the “favored few.”