One-fifth of U.S. mortgages "underwater"

From Bloomberg News; writer is Brian Louis

Amid all this attention on AfPak and the drone strikes, a reminder that the war abroad IS the war at home. Every million we spend "over there" could have been part of the economy "over here." Terrorist threat or no, this is a maxim of war that dates at least to Persia and Greece.

Forgive me if this is oversimplification, but when the banks create a financial crisis (ability to make payments on debts disrupted; said payments still due), homeowners lose their homes and either move in with family or start renting elsewhere, lose the equity that was coming from home ownership (plus any consumer lending power that comes with said equity: see "decreased demand for goods and services") and the government intervenes to help the banks continue to lend, to create more consumer debt ... and who becomes the new property holder (even if the property is sold off to a hatchet man repossession company who re-sells repossessed homes, the owner is still ...): Banks.

Big bank, little bank, most banks are owned by ... other banks. Who ignited the fire? Mortgage-backed securities, collateralized debt obligations, credit default swaps ... Banks.

It's kind of like paying taxes to maintain a military that, instead of defending the borders within which you live (relying on someone else to protect your property and the lives of your family), armed men come to your house and haul some family members away to camps while shooting the others. "Sorry, your lease on being alive and free ... has expired. We have come to collect."

Agreed that's a little reactionary, but who is protecting these banks from regular people who have nothing left to lose? More importantly, why is a fifth of the population so disenfranchised and disunited that they aren't desperately defending their lives--AND BLAMING THE BANKS?!! Are they clinically depressed and overly medicated? Is every service shut off except for 150 channels of cable? Upon this I dwell, and this confuses me.

Here's an excerpt of the Bloomberg piece:

May 10 (Bloomberg) -- More than a fifth of U.S. mortgage holders owed more than their homes were worth in the first quarter as repossessions climbed to a record, according to Zillow.com.

Twenty-three percent of owners of mortgaged homes were underwater during the period, up from 21 percent in the previous three months, the Seattle-based property data provider said today in a report. More than one in 1,000 homes were repossessed by lenders in March, the highest rate in Zillow data dating back to 2000.

Underwater homes are more likely to be lost to foreclosure because their owners have a harder time refinancing or selling when they fall behind on loan payments. U.S. home values dropped 3.8 percent in the first quarter from a year earlier, the 13th straight period of year-over-year declines, Zillow said.

“Having a lot of underwater homeowners will add to the downward pressure on house prices,” said Celia Chen, senior director at Moody’s Economy.com in West Chester, Pennsylvania. “We do expect that home prices will fall a bit more.”

Bank repossessions in the U.S. rose 35 percent in the first quarter from a year earlier to a record 257,944, according to RealtyTrac Inc., an Irvine, California-based company.