I might be looking at this wrong, but can someone help me understand the following logic, “I also wonder whether they are considering a 1st trust deed and a 2nd or 3rd loan as separate loans. Thus the first can be ok while the 2nd is underwater increasing the % of loans underwater.”
Say someone buys a $400,000 home. they get a mortgage for $320,000 and a second for $80,000. The home is now worth $380,000. If they were counting these as separate loans and separate houses, they would conclude that 50% of homes are underwater when in fact 100% of homes were underwater. This miscounting would reduce the percent, not increase it.
