Synthetic Assets: Incrementally reducing negative equity is not saving…

…parallel to the fantastic breakdown of this issue on Synthetic Assets, my wife and I were watching the Today show this morning when the issue of mortgage rates and refinancing came up.  According to the analyst being interviewed, the key to refinancing if you are more than 125% underwater is to pay down your mortgage.  Never mind that if you’re that far underwater, there are no actual programs that will allow you to refinance excepting the VA loan.  Further, no one is going to drop tens of thousands of dollars against a mortgage that is underwater to such an extent, for the reasons Synthetic Assets details.

So long as people labor under the false impression they owe the banks their very lives, the banks will continue down this path (with their politicians happily lapping at their feet).

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