According to a study released in April by Demos, a public policy group in New York City, people are borrowing more than their homes are worth, and as a result, the amount of home equity has fallen from 68 percent in the early 1970s to 55 percent last year. Florida's red-hot real estate market may have a serious downside. Fraud.
Javier Silva of Demos, a New York-based think tank, yesterday opposed any change. Raising the limit would extend a dangerous trend of loosening lending standards to enable consumers to buy homes they can't truly afford, Silva said. "The answer is to find ways to lower home prices, not simply raise debt limits to allow inflated prices to soar even higher," he said.
A proposal to reduce housing costs by relaxing federal lending limits in pricey real estate markets drew a mixture of praise and sharp criticism yesterday from real estate analysts.
Demos's senior research associate and author of A House of Cards: Refinancing the American Dream, Javier Silva, said that, even in the absence of a real estate crash, many families "are facing a financial crisis," partially because they've taken on more mortgage debt.
As more and more people have rushed to be homeowners, they actually own less of their homes than they have in decades...adding another risk factor to the overheated real estate market.
When an appraiser overvalues a home that can lead to an upside down mortgage where you end up owing more than the property is worth. "This is a major problem," says David Callahan, with an advocacy group called Demos that recently looked into just how widespread the problem is.
Appraisal experts and consumer advocates alike are now sounding an alarm about a startling problem that could have you borrowing more than your home's actual value.
People ages 45 to 59 are the most likely to refinance, according to Demos, a nonprofit public-policy organization in New York City.
The real estate bubble will eventually burst, says Cary Silvers, vice president of New York City--based GfK NOP, a market-research company that in 2004 gathered information on boomers' attitudes toward refinancing.
Steve Carbo, of the Democracy Project, a New York-based advocacy group that pushed for broader voter registration, said Iowa did far better than many states in implementing the provision.
Voter registration among the disabled and elderly in Iowa increased eight-fold between the 2000 and 2004 elections, Secretary of State Chet Culver said Wednesday.
Eighteen- to 24-year-olds have an average $2,985 in credit card debt, according to last year's Demos USA study, "Generation Broke." The average plastic debt for 25- to 34-year-olds is $4,088.
DEMOS, a New York-based public policy group that studies economic opportunity issues, and the Center for Responsible Lending, a Washington policy group focused on predatory lending, said low- and middle-income families fall into credit card debt to cope with income declines or unexpected costs.
According to the survey, 48 percent of respondents said they used credit cards to pay for car repairs while 38 percent reported paying for home repairs with plastic.
"The Plastic Safety Net," released Oct. 12 by policy research and advocacy groups Demos, the Center for Responsible Lending, and the AARP, reveals what's on our credit cards, why it's there, and what we're doing to manage our financial obligations.
The study found that most debt-strapped households use credit to cover unavoidable expenditures, not discretionary purchases. We're increasingly relying on plastic loans to pay our rents, mortgages, utilities, groceries, car repairs, and insurance premiums.
There are a slew of 401k reform plans out there, ranging from modest proposals for automatic employee enrollment (but undercut by the employee's right to opt out) to replacement of the 401k by a new system run by the government or a nonprofit organization. (For a useful description of the various ideas, see a study by Robert Hiltonsmith for Demos, a liberal think tank that espouses total overhaul.)
