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American Banker's Alex Ulam on a recent report that says 40% of homeowners who took out a second mortgage on their homes are now underwater.
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This nearly 40% of homeowners that took out second mortgages are on the water you.
That apparently is a growing problem than many banks on not showing on netbooks Alex -- from the American banker magazine is here to explain it.
40%.
Of those people who took out a second mortgage all on the -- what spell it out what does that mean.
I mean they owed more on their homes than their homes are worth.
And that also means that they can't -- can be difficult for them to sell those homes to do a short sell.
And only 20%.
Of first mortgage owners are on the war so this is of an acute problem -- second mortgage on Africa here.
Not banks carry those mortgages on their books at whiteman things that.
Close to face you like earned -- B -- -- -- -- cents on the dollar.
So that's -- down the road when those mortgages default of all go bad I guess you could say.
The fault that the subject those to the banks to get the title either be a vote for it and others are extended interest pretending.
On this mortgages they should be taken more of a loss right now -- -- -- Because they can't afford to.
It it'll affect their solvency -- is this a rolling crisis and as these second mortgages go belly up that these losses go to the bank and -- of rolling crisis.
And throwing crisis here we're gonna become like Japan we keep on doing this.
How big is this second as the second.
-- issue I mean it's not that -- And every single person out there has taken us home equity loan on their homes as a smaller percentage right we have any sense for how much sort of money it involves.
Well the banks the 45 before largest banks have about -- -- fifty billion dollars worth of this stuff on their book.
The thing that kills me is it that the whole TARP program was supposed to be about taking -- the toxic assets.
Formed a big banks.
These are toxic assets and they're still not being book correctly right after the and as opposed to the first lien mortgages most of those which the banks don't even own.
Those are bundled up into mortgage backed securities that are owned by pension funds such as calpers and those are picking big hits on these mortgage on -- and those on the first of his or -- in or into or pensions.
