ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
SHARE
In order for us to get a mortgage, the bank required that an appraisal be done. The appraisor offered to show in her report that the house was worth more than its true market value so that we could ask for a bigger mortgage. We declined.
We applied for a mortgage so that we could effect some repairs. When they reviewed our application, they repeatedly asked us if we would like to increase the amount to be borrowed. (It seemed to bother them that we planned to borrow only 25% of what the house was currently worth.) We declined.
I don't know how things are currently, but the mortgage industry definitely encouraged you to use your house as an ATM.
Another problem is that people thought about real estate in much the same way as they did with tech stocks...the sky is the limit. So, people borrowed more than their homes were worth, because they assumed that over time their homes would only increase in value, and that they would come out ahead of the game.
My neighbors (when I lived in the US) used their home as a college fund for their children.
Yes, but California by itself is what largely crashed the economy -- California accounts for a sizable majority of all mortgage dollar defaults in America.
According to the Harvard University Joint Center for Housing Studies' annual report on the housing market, equity cash outs rose from 32 billion, or about 10 percent of refis, in 2000, to $327 billion, or 23 percent of all refi volume, in 2006.