I was in SD from ’85-87 and then ’91-present so I was here for the majority of that cycle. I actually worked in the finance industry at that time. The banks, regulatory agencies and interest groups were not mobilizing as they are now.
In the early ’90’s, SD lost about 60K jobs in a very short span of time. Unemployment was screaming upward toward 8%. The S&L crisis was in full effect. Things were pretty bad here. It wasn’t a matter of a homeowner not being able to afford a re-cast payment – alot of people couldn’t afford any payment at all because they were out of work.
I think what we are seeing now from almost all camps is just more reinforcement of the lending universe’s well-established position on owning homes – aka – they don’t want your house. They don’t want to foreclose. Particularly if you are upside down. They want to keep you in that house and keep those payments rolling in.
I believe there is an immense difference between someone who cannot pay their mortgage because they are unemployed and someone who is employed but cannot afford a higher re-cast payment. In the latter case, there is something there to work with. Re-casts can be postponed. Mods into a fixed rate can be made. There are options. As long as there is employment and income and some level of capability, there are going to be options.
