[quote=jpinpb]Rich – didn’t the money disappear in a sense when housing prices went down in the form of circulation, only b/c the money was being extracted in the form of HELOCs and being spent. They certainly weren’t saving it. (savings lowest in history)
So if the price goes down, wouldn’t you consequently lose your equity extraction and money circulation? People were taking great advantage of that. Not just new, recent bubble buyers. I can’t count how many NODs I’ve come across on properties that were purchased long before our bubble. A few that should have had loans paid off in full.[/quote](emphasis added)
jpinpb, this is a little OT, but I’m assisting a friend right now with Countrywide’s “Deed-in-Lieu Plus” program to which she applied in June. No NOD has ever been filed. Through several “cash-out” refis over the years, she has managed to borrow 250% of today’s value of her property, which she purchased by herself in 1989. If Fannie Mae accepts her property, she will execute the Deed in Lieu and have 30 days to move (no rent) and $3,500 upon (a clean) move out as “walking money.” She’s already lived “mortgage-free” for two years. We should know in the next week or so.
I feel bad for her because she didn’t realize very much cash at all from these “machinations.” Aside from being reamed with usurious closing costs by several loan brokers, almost all her “cash-out” money went to attorneys as her two exes (both well off) litigated her into oblivion for 100% custody of both her kids. After all this time and money and at least 80 court hearings (some with and some w/o an atty), she was unable to raise either of her children past pre-school age. Now one is in high school and one is an adult.
Unfortunately, in CA domestic courts, money talks and other stuff walks. The (child-support) payor’s attorney’s top priority is avoiding support and the “best-interest” standard is out the window :=(
In her mid-fifties now, she is virtually starting life all over again.
[quote=jpinpb]While I understand the decrease of an item does not destroy the ability to purchase, wouldn’t it change the quantity/volume of money circulated (wealth?)
So maybe money supply isn’t the issue. Maybe it’s the distribution and spending?
I admit rudimentary knowledge on this topic. Just my observations of what’s happening. I would love to understand all this and make sense of it. I always seem to have a difficult time grasping the dynamics of it all and I appreciate your tolerance w/my questions.
Thanks for your patience on this topic. I will go back and re-read your links again to see if it sinks in.[/quote]
Yes, jp, I have a handicap making sense of all this as macro and micro-economics were the ONLY classes I needed at City College to get my Associate Degree in Bus. Admin but I never took them. Now I’m not even sure that Associate Degree would do anything for me at this late date – lol!
