" Doesn't the cumulative MEW / HEW extraction have to be repaid eventually."

Based on the foreclosure rate, apparently not.

Somewhat OT, and touched upon in another thread - question about MEW via HELOCs.

Whatever the figure is for untapped HELOC withdrawals (is there a data point for this?), in other words currently approved HELOC lines where current draw is less than the cap, what is the thinking that this will be tapped, converted to cash, in order to grab it gefore HELOC lines are re-evaluated due to credit/market conditins? Does anybody think this may become a significant phenomenon? If it does happen MEW would be a moving target for forecasting because a lesser percentage would actually flow thru to consumer spending/

Thoughts?

"Rick Loughlin of Coldwell banker . . . just said that pricing is now stablized"

What's that? A Realtor(tm) said prices are stabilizing? Boy, that was unexpected.

I guess maybe this really IS a good time to buy a house . . .

or, perhaps more importantly, wholesalers...

Note that Roubini calls equity extraction HEW (Home Equity Withdrawal) and I usually refer to it as MEW (Mortgage Equity Withdrawal). MEW has been used for years, but HEW is a more accurate description

Well no. If I want to withdraw some equity from my stock portfolio, I sell some of it. If you want to extract equity from your house, you sell it.

Borrowing is borrowing, it's not a withdrawl of anything and it has to be paid back.

Doesn't the cumulative MEW / HEW extraction have to be repaid eventually?

Not by the borrowers if they sell the property, no.

That's still a repayment by the borrower. If I sell my car to pay my credit card bill, you wouldn't say I'm not repaying the loan. The credit card balance is not secured against the car, but that's irrelevant. All my assets (save those protected by bankruptcy) are accessable by my creditors regardless of how my liabilities are secured. A mortgage is just a lien that prevents the borrower from disposing of the property without repaying the lender, making this more direct.

I will also remind everyone the the reason this borrowing is stopping is that people now owe more than their houses are worth. These are recourse loans, so the "homeowner" is personally liable for the full amount.

To sellers, home appreciation is free money

Well it is free money, just like any capital gain. But you have to sell the asset to get it.

You cannot borrow against capital gains, because they exist only at the time of sale. Only against the expectation of them. And that costs you something - it's called interest. And if the capital gains do not materialize as expected, you have spend money that you will never get.