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> Lowering housing prices will put many mortgages underwater. But it's important to realize that if a mortgage goes underwater, nothing happens. If you buy st
by jjav 2y ago
> Lowering housing prices will put many mortgages underwater.
But it's important to realize that if a mortgage goes underwater, nothing happens.
If you buy stocks on margin loan and that goes underwater too much you get a margin call and are in deep trouble.
A mortgage is nothing like that, it can happily go underwater and nothing happens. My mortgage has been underwater twice during its existence. No big deal.
- rickydroll 2y agoIn 2008, banks called in some of their mortgages. Sometimes, this was under the cover of a foreclosure. It was not pretty.
- jjav 2y agoForeclosure is when you stop paying the mortgage. If you keep paying it because you like the house and want to continue to live there, being underwater doesn't mean anything. Can you point to articles describing banks in 2008 calling in underwater mortgages? That makes no sense, since it'll only hurt them (the bank doesn't want to own your house, they want the income stream from the mortgage). Also, at least for all mortgages I've signed, there is no provision in the contract for the bank to do that as long as I keep paying.