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Why out-of-control bubble-era mortgages still threaten to smash major U.S. housing markets

Keith Jurow
Why out-of-control bubble-era mortgages still threaten to smash major U.S. housing markets

With home prices soaring nationwide during the housing bubble, homeowners an opportunity to pull some of that growing equity out of their house.  The main vehicle was a refinance of the homeowner's first mortgage. The owner cashed out the growing equity in the house by refinancing the first mortgage with a larger first. How much extra cash are we talking about?  Freddie Mac publishes a quarterly cash-out refinance report.  Between 2004 and 2007, homeowners were able to cash-out a total of $964 billion.  They were free to spend it on anything, and they did.  Freddie Mac's figures include only refinancing of prime first-lien conventional mortgages.