House Prices Emergency

Reuters reports that in the UK the house price index had its biggest monthly fall in August since May 2009, read it here. The reality of the crisis now re-appearing will be aggravated by the past government's efforts to keep underwater borrowers, as those with negative equity are sometimes known in the USA, in their home even if unable to meet their mortgage repayments. This category of borrowers will now grow in the UK as the masses of public sector parasites are necessarily shed by a bankrupt state employer. Things are developing faster in the USA where a short term refinancing programme is now being pushed by Fannie Mae, becoming known as an Obama Refi, see this explanatory link which includes the following interesting but alarming fact (with my added emphasis): One of the biggest dangers facing the housing market is the glut of underwater homeowners who could default if their financial situations or home prices worsen. About 11 million borrowers, or 23% of households with a mortgage, were underwater as of June 30, 2010, according to CoreLogic Inc. That number is expected to double next year. The constant stream of encouraging forecasts of stronger economic growth, activity and recovery in the near future presently flowing from the European Commission, the ECB and various former national European Governments, all in direct contradiction of the factual information of deteriorating conditions in the real world can, at the end of the day only make matters worse. If 23% of homeowners are in negative equity today and that number doubles in the coming year to almost half of all homeowners, how many will then become Walkaways sending back their keys? What effect will that have on the still floundering, and in the UK nationalised, banking (so-called) business?