Few would opt to renege on their mortgage if the equity gap were below 10% of their home's value, the authors find, partly because of the costs of moving.
Over all, there is no centralized effort by regulators or the private sector to track the total extent of possible mortgage fraud nationwide, a gap that has drawn criticism from some policy analysts.
As the finance industry reduces its exposure to the subprime market, as Lehman and others have done in the last few weeks, there is a growing gap between mortgage assets and the capital needed to support them, according to Fox-Pitt Kelton analyst Paul Miller.
"Mr. Breslin had received a $24.3 million first mortgage, and we closed the gap with a $2.7 million 10-year second-mortgage loan," he said.
The smaller gap means its mortgage assets will be repaid and replaced at a lower interest rate 10 months sooner, on average, than its $780 billion in outstanding debt.
'If you are worried about there being a shortfall, you should continue with the payments and convert part of your mortgage (equivalent to the estimated gap) to repayment,' he advises.
The administration's policies failed to deal with the underlying problems, and by protecting the banks rather than mortgage holders, they exacerbated the gap between America's haves and have-nots.
If necessary, the seller can carry back a second mortgage to fill any finance gap.
A senior administration official listed several key obstacles to right-to-rent: concerns about the landlord role that banks would be required to play, difficult accounting implications, and the payment gap between the mortgage payments and rent imposed through the settlement process.
But she does regret some of its consequences: the dearth of state accommodation for those who need it (there's currently a waiting list of 1.5 million); the widening gap between the mortgage-paying haves and the low-rent have-nots; the loss of the Utopian impulse towards social integration.
