Word of the Day: homedebtor


homedebtor n. A homeowner with an extremely large mortgage, particularly one that he or she is unlikely to ever pay off.


Unfortunately, for many people the word homedebtor is a more accurate word than homeowner. It refers to those people who are living in houses with "no skin in the game," little or no equity, and a mortgage they are not likely to repay, and may possibly not be able to afford.

Homedebtor (a.k.a. "recent homebuyer") is alsi defined thusly: Perpetual debtor/serf who will
probably never own the home outright, thanks to cyclical refinancing
(used to fund conspicuous consumption) and property taxes.   
—Patrick Killelea, "Housing Bubble Glossary," Patrick.net, August 12, 2005
In the end, millions of homedebtors will lose their homes, the homes they told everyone they "owned", the homes everyone told them would "be a great investment".
—Bruce D. Stewart, "US foreclosure rate soars 43%," belairhomesforsale.com, November 2, 2006


WordSpy, April 16, 2008

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What's been said:

Discussions found on the web:
  1. Kp commented on Apr 17

    It ain’t yours until it’s paid for. The word homeowner IS thrown around way too liberally.

  2. VennData commented on Apr 17

    Disinvestment Bank

    1. A bank that gives its investments to the Fed in exchange for Treasury Bonds.
    2. A bank that gets disrespected (e.g. There’s that clown who ran that famous disinvestment bank, Bear Sterns)

  3. AGG commented on Apr 17

    Old Saying:
    Never borrow money to purchase a depreciating asset.
    New “Things are ALWAYS different this time” Saying.:
    Always borrow when someone is fool enough to lend you the money.

  4. craig commented on Apr 17

    at some point, maybe 3 yrs, maybe 5 yrs, maybe 15 yrs from now, the system will be back in equilibrium and people will again make good decisions to put a nice percentage downpayment, take a 15-30 yr fixed mortgage well within their ability to make the payments, and people will once again see houses as places to live, enjoy life, raise a family, plant in a garden, watch football games with buddies, get to know the neighbors, and not worry if they can “flip” it within a few yrs to make a huge profit.

    it will be the new black.

  5. larster commented on Apr 17

    The question is (I think this was originally framed by Soros) what happens to the economy as we get back to the “equilibrium” mentioned by Craig above. Soros called for an 8% hiccup, which is his number as a forecast of what people have to save to meet retirement needs. If they need this much to fund a retirement (which I believe), they need to save much more to be able to put up an adequate down payment, buy a car w/o a 7 year loan, etc. This would mean that we have turned the hiccup into a belch on the way to an upchuck.

  6. steve commented on Apr 17

    You assume that people have financial knowledge. They don’t. I would say 80% of people would be willing to purchase a home today if they could resell the house in 5 years for what they paid. Now granted there is the renal equivalent that they gain, but that’s it. As long people can pay the mortgage they will stay in the house.

  7. stuart commented on Apr 17

    bagholder. That’s a good one too. Lots of them around.

  8. cjc commented on Apr 17

    Regarding the drop in home prices…..

    I am looking to buy a home (that I can afford, assuming we don’t have food riots etc.) I am somewhat hesitant to put the offer in because I see enormous amounts of talk about huge slides in home prices.

    I am in the Philadelphia suburbs and while we have seen large home price appreciation over the last several years, it is not yet ridiculous, and I don’t think the prices are going to drop all that much. Talking about a 4BR home in a nice neighborhood with good schools for 400k.
    Row homes 189k, twins for 240k, Singles for 325k (3br 1.5 bath), and 4BR 2.5 bath for 400+.

    Anyway, does anybody expect the exorbitant foreclosure rate to spread to places where it is not currently a problem?

    Put another way, when JPM and others talk about not seeing the end of the declines — does that apply to housing markets that have not really faltered? Maybe down 5%.

    This is a real, personal inquiry.

    The reason it might be relevant for discussion on this blog is that I think that many others are hesitant to BUY if prices are forecast to drop. I.e, all the negative talk is not only discouraging me (self-described rational actor) but also the pool of potential buyers in general. Fear perpetuates the downturn.

    HousingWire featured
    a national map of foreclosures by county, and mine is light blue. The colors are reminiscent of Scrabble and my county is double letter score.

    Am I an isolationist when I say “43%!? Not in my town!” Or an ostrich?

    Comments about the spread of the red are hereby solicited.


  9. saltwater commented on Apr 17

    OT- Anyone know why the Ahead of the Curve charts never seem to be updated?????

  10. Pool Shark commented on Apr 17


    Unless you have negotiated an amazingly low price (by historical not current standards); you are insane to purchase residential real estate right now.

    Whatever you pay for it today; it will be significantly cheaper in a year.

  11. Carrie commented on Apr 17

    So many homedebtors…. so many people just walking away! We could help the bagholders and your neighborhoods and economy by taking the losses now instead of later. Do short sales, do short refis adn do deed in lieu– both the mortgage companies and homedebtors need to STEP UP!

  12. Cal commented on Apr 17


    They homeowners that don’t read their contracts never miss the missing N so they don’t know to be insulted.

    Homeowner >> Renter >> Homeower.

    Renter Me.

  13. SKG commented on Apr 17

    You know, as long as the government subsidizes mortgage interest, but no other kinds of interest (or principle), they are strongly motivating people to borrow as much against real estate as possible.

    I’ve seen very little discussion about the effects of the mortgage interest deduction on home prices in California, and the explosion of Interest Only mortgages, piggyback mortgages (which were deductible) vs. PMI (which wasn’t until recently), etc.

    The housing bubble also took off around the time the law regarding cap gains on primary residences changed. Previously, it was more expensive to “cash out” of a home and a second mortgage for the entire amount of your equity couldn’t be repaid from proceeds of sale (since you’d also have cap gains taxes.)

    But we don’t here any discussion about the tax code in all this mess.

  14. jim commented on Apr 17

    I’m actually hoping for a very large correction so maybe my wife and I can think about buying a home the correct way, cash.

  15. SteveC commented on Apr 17

    cjc: Yes, I would look at buying right now, but you need to ask yourself: Am I prepared to live there for at least 7-10 years? Also, do the research about average prices in the neighborhood, number of foreclosures nearby. Don’t overpay and be patient until you find the right deal for you. It’s a buyers market.

    In the early 90’s, I bought my first house when real estate was also poor. We had our pick of houses, and got a great deal on a great house in a great neighborhood. No regrets.

  16. AGG commented on Apr 17

    Pool Shark is right. But suppose you just love a house?
    1) Is it a fixed rate mortgage?
    2) Is your monthly NET income 4 times the monthly payment?
    3) Is your income assured for the life of the morgage?
    Yes to all the above, then buy it, enjoy it, and don’t plan to sell it.

  17. AGG commented on Apr 17

    Great point about the cap gains. If they had a graduated scale where the percentage of profit free from cap gains increased with the number of years of ownership, it would help stabilized the market.
    The crooks would then try to back date the paperwork but it would be risky.

  18. Estragon commented on Apr 17


    You didn’t mention what renting the equivalent properties in the same would cost.

    Even assuming local prices aren’t going to drop much, it’s highly unlikely they’ll be going up sharply anytime soon. If renting is cheaper for now, why not do that and bank the difference until things stabilize?

  19. jkw commented on Apr 17


    Look at how incomes have changed for the area. Multiply the median home price from 2000 by the change in median income since 2000 to determine roughly what fair prices would be. That will tell you how likely prices are to fall.

  20. Francois commented on Apr 17

    Being myself in the Philadelphia suburbs (and recently bought a home too) I can tell you this:

    1) There has been price appreciation, but nothing absurd like in Bucks County and others.

    2) Greater Philadelphia has a strong pool of professionals jobs and no less than 5 universities, prestigious hospitals and the like. And pharmaceutical as well as software sectors are quite strong too. Thus, high paying jobs that are relatively secure. (Tell me what job is secure today apart from tenured professor…)

    3) The way real estate law is written in Pennsylvania to encourage long-term thinking and minimize the kind of wham-bam-thank-you-Mam quick buck serial flipper behavior. A beneficial trait of the Quaker heritage.

    4) The financial sector could be fragile for the next several years.

    So, all in all, a rather dynamic area with a nice share of recession-proof jobs make it relatively stable compared to many other areas in the Mid-Atlantic area. You could have chosen much worse. ;-)

    Good luck to you.

    Good luck!

  21. SPECTRE of Deflation commented on Apr 17

    Second word of the day: DEBT SLAVE. They thought it was free money I guess.

  22. M.Z. Forrest commented on Apr 17


    As with any capital purchase, you need to figure out what it is worth to you. You will spend far more in taxes, insurance, maintenance, and repairs than the difference between buying at the bottom or 5% above the bottom. To put it another way, there are plenty of stupid things you can do after buying a home that will eat up what you ‘saved’ by waiting. If you are particularly shrewd, see if you can find a place that will require 10% less in cash flow than what you pay presently. Unfortunately, prices are still high enough that you would be probably trading down.

  23. cjc commented on Apr 17

    Thanks for the comments.

    I should post this alone:

    (sorry if link is not active)

    Is the red going to spread all over the country? Do the economic forecasting financial types see the red of the foreclosure rates spreading to areas where it is not currently an epidemic.

    Containment? or no?

    Currently, things are not sinking like a stone around ‘here.’ Lots of comments were about whether I should buy a house, but that’s not really what I’m asking.

    Home sales are down, not out.
    Not yet.



  24. Winston Munn commented on Apr 17

    If you e-v-e-r think you truly own a house, try skipping the property tax payment and see what happens.

  25. Greg0658 commented on Apr 18

    word of today Friday April 18th … spoke by an aid sociologist on the Today show interviewing the “lost boys” of the Morman polygamy story, just after the interview with the moms of removed girls from Texas encampment


    thats it … in the Middle East the globe and America

    Conan the Barbarian 1 came to mind

  26. Peter commented on Apr 19

    In that case, there are a lot of Homedebtors in this country. :) Especially at the rate people refinance their homes.


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