Sunday, September 2, 2007

Real Stories from Small Town America

Risky lending spoils dreams for many homebuyers

If you don't think America's problems will affect the U.K. then read this covering the foreclosure of one families 3 bed house with garden that cost $180K 3 years ago, which is a bargain UK terms. According to Moodys about 1.7 million American households will lose their homes this year and next reaping untold economic damage across the U.S. and beyond.

Posted by enuii @ 08:28 PM (565 views)
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3 thoughts on “Real Stories from Small Town America

  • Ihopeitgoeswithabang says:

    “They basically put us in a loan that they knew we couldn’t pay,” Horn said. “We never should have done it.”
    Can you imagine how many people in this country have done exactly that by borrowing far too much money! they can never pay back?!
    The UK economy has survived on House Price Increases. It is now alomost totally dependant on it in my view.
    Even a small crash will cause huge problems because we as a nation have built up the economy and lifestyles reliant on strong house price increases.

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  • The unfortunate ex-homeowner splits the blame between himself (home-buyers) and those flogging the mortgages. He gives some good advice in the last 2 paragraphs aimed at both parties:

    1) ensure you have a deposit of 20%
    2) make it harder for people to buy houses (obtain mortgages)

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  • The case studies from the US make interesting reading – a typical estate house in middle Britain might have 600 sq ft and sell for £200k ($400k) today. In 2002 it would have sold for about £150k ($300k)

    One of these houses was twice that size – 1200 sq ft – and sold for $150k (£75k) in 2002.

    So British houses are four times as costly per square foot as in the US – OK, the exchange rate is badly skewed at the moment, but if the American market is falling over from so much lower a peak, how on earth can anyone argue that UK property is not dangerously over-valued?

    I remain convinced that WHEN the UK market starts to fall, it will be impossible to arrest – the classic ‘falling knife’ scenario – few will try to catch it, and those who do will regret their folly!

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