A lot of pundits have been predicting a new housing bubble, one even worse than that of 2008-2009. In this economy, of course, anything is possible.
But Bloomberg News now reports that the Fed is requiring a dozen major banking institutions in 2014 to stage a series of ‘war games’ if you will, stress-testing their ability to endure a plunge in the value of their portfolios.
How would they fare in another massive housing bust?
Hmmm, let’s toss into the mix a few factors that nobody ever talks about. 24% to 50% of the mortgage portfolios held by some major lending institutions are in homes located within American Homeowners Associations.
Several recent studies have shown that home values don’t appreciate or hold their value in Homeowners Associations as they do in properties outside of HOA control.
As documented in my new book, Neighbors At War, every foreclosure in a Homeowners Association drives down surrounding home values by several percentage points.
What’s that again?