The reason is that first, lenders regard loan servicing as a cost center. They don’t staff up to realistic levels needed to do real estate short sales.

Second, lenders don’t want to give investors enough margin. So they will only approve sales that are not far below market. Not enough margin to give real estate short sale investors.

Third, lenders have to get permission from the true owners of the loans, the noteholders. This process takes a lot of time and results in a lot of sales falling through.

If you want to do a short sale, if you want to sell even if you owe more than your property is worth, then please get my special 25 page report.

And when it comes to Credit Bubble analysis, the Rest of World (ROW) page in the Fed’s Z.1 “Flow of Funds” report is actually the one I contemplated the most (and with the greatest unease) this week.  ROW increased holdings of U.S. Financial Assets by $1.573 TN last year, or 11.4%. With the Bursting of the Credit Bubble and the resulting impairment of U.S. securities, such growth has become unsustainable.  ROW holdings of U.S. Financial Assets were up an astounding $7.222 TN, or 88%, in just four years.  ROW more than doubled holdings of Agency/GSE MBS ($1.379 TN) and almost doubled Corporate Bonds/ABS ($2.583 TN) position since the beginning of 2004.  Security Repo holdings grew from $460bn to $1.100 TN. U.S. Equities almost doubled (94%) to $2.806 TN.  Total Credit Market Instrument positions were up 79% over four years to $6.855 TN.

Let’s translate this in plain English. It is the key to the mortgage bubble.

Foreign investors buying US mortgages has kept the US propped up and floating high. It has financed over one trillion dollars of US debt just last year alone. That is $3500 approximately, for every man, woman and child in the United States.

Now that the debt bubble is bursting, why should foreign investors continue financing the US debt?

And if they don’t, then what will the US do with approximately $300 per month per person deficit not being funded by anyone?

This is the key to the mortgage bubble and the next Great Depression. You cannot see the type of collapse this involves without a lot of problems. Problems that are just starting.

So please, here is what I urge you to do. Watch this important short sale video and learn how to get out of your mortgage debt, how to reduce your credit card debts, and much more.

The resulting withdrawal of credit could knock one to 1.5 percentage points off economic growth, compounding the impact of collapsing home construction and softer consumer spending due to lower home wealth, the study said. It was presented Friday at a forum in New York on the Federal Reserve organized by the Brandeis International Business School and the University of Chicago Graduate School of Business.

I think it will be far worse than that. Even this article points out:

For each dollar of loss not made up for by new capital, these institutions will have to shrink their balance sheets by $10 to $25 by reducing lending or selling securities. They would do that not just in order to keep their capital ratios steady, but also to raise those ratios to align with risk-management practices.

Gold is at all-time highs, silver near all time highs, oil is $103 per barrel. Inflation is taking off on things like corn, wheat, energy, and metals.

Yet the cost of living has been skyrocketing, while wages are stagnant.

Mortgage short sales - how much impact do they have on the economy?

You tell me.

And please watch my acclaimed video on mortgage short sales to learn how to do a short sale, how to preserve your good credit, how to avoid personal liablity, and how to sell your house in nine days.

I am the developer of the Mortgage Relief Formula and I talk to a lot of homeowners who are faciging foreclosure and have HELOCs in foreclosure. Or they are paying their first mortgage payment using the HELOC.

So now there is a story from the Los Angeles Times that shows lenders are taking away HELOCs:

 Tens of thousands of homeowners with home equity lines of credit are getting a rude surprise: They’ve been told by their lender that they can no longer take money out on their credit lines because sinking home prices have left them with little or no equity.

Among the lenders taking such action is Countrywide Financial Corp., which sent 122,000 letters to customers last week telling them they could no longer borrow against their credit lines. In some cases, according to the company, the borrowers are now “upside down” — the total debt on the home exceeds the market value of the property.

I think that a lot of people who are in foreclosure on home equity lines of credit or who are in foreclosure on their first mortgage will find that the well is running dry in terms of borrowing yet more money.

Money and credit are not the same. Credit can be revoked. If you have credit cards and you are bouncing from one card to the other and drawing a balance transfer check from Peter to pay Paul, you may be in for a rude awakening. The home equity lines are being cut off. So are credit card lines.

It’s time for you to get better information on what to do to slash credit card debt without borrowing still more money. And get my 36 page free mortgage relief report on avoiding foreclosure, dealing with credit card debt without bankruptcy and more.

As this wonder blog Bear Ridge Project post says:

 Walk away from it. Put the keys in the mail and walk away. Sit for a couple of months in your house don’t pay the mortgage, pocket the money. Use those dollars to buy a very cheap mobile home or trailer, the smaller the better, you will want to be able to move it. You will own this home outright no payments.

There is no debtors prison yet so get out from under your mortgage now. Your credit is going to be wreaked anyway so don’t let that scare you. Your neighbors are in the same situation so don’t let the so social stigma stop you. You have no equity built up to lose. You have no moral obligation to pay for these well designed traps, remember you were lied too.

All true.

I did three radio interviews this past weekend and on each of them the subject came up. People are leaving their houses empty and just, well, leaving.

There are a lot of ramifications to this. One is that lenders are going to be stuck much worse than anyone predicted.

But the other is that lenders will want more than anything to have you do a short sale. If you have two mortgages they can still come after you later, so a short sale is well worthwhile. Or if you have  a situation where you have a second home or a non-residence or rental properties, you may face personal liability.

There are a lot of instances where you may be liable personally. Walking away is not as good as dealing with the situation. Get my free 25 page report on keeping your home or walking away, dealing with credit cards so you get out from under without bankruptcy, living rent free while in foreclosure and more.

A lot of the houses that people discuss with me are in the $200K range but many are upwards of $! million.

This Reuters article discusses it in plain language:

 The home owners who find it harder to walk away are those who took out large home equity loans before prices started falling and now owe far more than their home is worth.

“It’s difficult for home owners in that situation to sell as they’ll still be left owing money,” said Dave Hanna, managing partner of Prudential Preferred CRE, which owns Prudential Homelife Realty in Hindsale.

Unlike subprime borrowers, however, wealthy home owners are more likely to try to cut a deal with their lender, rather than end up in foreclosure. The alternative solution available to them is to opt for a short sale.

Under a short sale agreement, the borrower sells below the mortgage value and the lender writes off the difference. The lender gets less than originally anticipated, but is not stuck with a foreclosed property. The borrower’s credit rating is damaged, but not as badly as if they had lost the home.

I have clients with $1 million or $1.5 million homes. The other night we had a conference call with one of my colleagues who has done hundreds of nine day house sales which let you sell your house from start to finish in nine days even when there are seemingly “no buyers” around.  We had a few people on the call who have homes of upwards of $1 million.

The problems with those folks is that often they have a second mortgage and they have assets. As I have explained in Avoid foreclosure short sales when you have two mortgages and you have assets  folkw with high end homes and some assets to protect have special issues.

The second mortgage lender may accept partial payment as a short sale but they may refuse to release you from the possibility that they will pursue your assets in the future. The statute of limitations for this sort of thing can be as long as four or five years, depending upon your state.

For information I urge you to visit this link about how they can come after you later  for foreclosure losses, and get my free 25 page important report Keep Your Home Avoid Foreclosure which has details on short sales, avoiding bankruptcy, how to deal with credit card debts and more. I never share your info with anyone and you can phone me at 877-691-DEBT, ext.101 for a private, confidential discussion of your particular situation.

As home values continue to sink, mortgage companies are increasingly walking away from delinquent home-equity loans rather than pushing borrowers into foreclosure. At the same time, some lenders, in an effort to protect against future losses, are looking at scaling back home-equity lines of credit held by certain borrowers who are still making payments.

We’ve been discussing this for several months. The problem is that the second mortgage holder can, in the words of the article, be bought up by “third parties” who can then collect from you.

That means if you have two loans and a foreclosure, then the second mortgage lender can come after you later for the loan — without foreclosing at all.

Get short sale help and also learn  deed in lieu of foreclosure information. And get my 25 page free special report on how to avoid foreclosure, handle credit card debts by settling for less than you owe while raising your credit FICO scores and much more. Visit www.MortgageReliefFormula.

The exact environment that created Proposition 13 in California is going on now. But now it’s everywhere in the US not just California.

• Housing prices peaked as they did at this time in California.
• Assessments soared based upon higher property values.
• Local governments geared up their expenses.

And now, even the 1/3 of folks who own free and clear face crippling taxes. They are no longer delighted to pay enormous $500 or $1000 property tax bills every month, equivalent (or more than) what their mortgage payment used to be!

Now I expect a huge property tax revolt everywhere. Arnold is dreaming…the bulk of the middle class are not going to stand for it.
I have some specific tips on escaping a crushing mortgage. And getting out of credit card debts without bankruptcy. Click on the links for more info and my 25 page acclaimed free report, Keep Your Home avoid foreclosure.

There was a post on renting versus owning the other day:

The chart above is the inverse of the previous chart showing the relationship between rent and price. The over-valuation in the market in 2000 becomes even more apparent. The price bubbles of the late 70s and late 80s also stand out. Our most recent bubble is hard to miss and even harder to deny.

The bottom line is that renting is in much of the country a far better deal than owning. That means that rents are destined to rise, or property values to fall, or both, if the usual “normal” relationship between rents and ownership resumes.

And if you want to get out from under a rental property (or more than one) by doing a short sale, then visit my informative Mortgage Relief Formula blog and learn about how to do short sales so the lender says “yes”, how to sell any house in nine days and even how to buy with no money and no credit.

One of the requirements for a bubble is widespread public participation. The bubble has a long run-up and towards the end it goes almost straight up. Much of the bubble money is tantalizingly to be made then (2005), but the people who try to ride that wave are too late.

What fuels a bubble? The requirement is simple: cheap credit. Government fueled credit. Government fueled money.

When that is gone, the bubble pops. And it doesn’t come back. Bubbles take many, many years to recover.

But we have to look at two types of home prices. What are called “real” prices are the prices of homes in constant, inflation-adjusted dollars. Nominal prices are the prices in current US dollars.

If we look at house prices on an inflation adjusted (real) basis, they will fall for 15 - 20 years.

If we look at them in nominal prices, they will fall for 2 - 4 years. The bottom will be reached somewhere in 2009 or perhaps 2010.

Bottoms are harder to call than tops. I called the top of the market many times and was wrong many times. I did in fact get out of all real estate in July, 2005, which turns out to have been great timing.

But that was kinda luck. I would have sold in 2004 if I had been able to.

Bottoms are easier to call. How can you call a bottom? Sentiment. When everyone hates real estate and everyone “knows” you can *never* make money in real estate, it will be time to buy.

Now I will say something that may shock you. I believe in real estate. It is a wonderful hedge against the dollar which eventually will fall to zero value.

The US$ is depreciating at 8% or 10% per year these days, contrary to the false US government reports. So if you own real estate, you can at least hedge because you are paying back a big loan in cheaper and cheaper dollars.

I wouldn’t be a “buy and hold” investor right now, but I do see opportunity in real estate even now.

Here’s one: you can option properties and  then use the nine day selling method to sell houses fast. I know of no other method that lets you sell your house nine days from today, without a broker, at top dollar, even when there are allegedly “no buyers”.

Another way you can make money in some areas is buy at today’s distressed prices and rent the house out. You can buy a house with no money down and no qualifying even if you have bad credit.

I have written a complete home study course that tells you how to negotiate lower payments on your existing loan without refinancing, how to do a short sale so you can sell your house and walk away with good credit even if you have messed up your credit and even if you owe more than your house is worth. I teach you how to sell any house in nine days without fixup, how to slash your credit card debts outside of bankruptcy in a way that actually improves your FICO credit score, and how  to buy with no money down and no credit. Click here to order a home trial of my home study course, Mortgage Relief Formula, just paying the shipping and handling.

Or if you prefer enter your name and email and I will give you instant access to my acclaimed free 25 page report Keep Your Home. I will email you information that is too sensitive to post publicly on debt reduction and mortgage relief. I never share your name with anyone, ever, and you can leave my list by clicking a single link whenever you want.