[Excaliber]

A sudden drop in house values is nothing new of course, it's the number of sub prime loans that are the real killer deal here. In 1991 the Hawaii economy collapsed virtually over night. Japan's economy is what killed Hawaii's economy. I had just bought my first Hawaii home. Put 10% down, had a reasonable fixed interest rate and payment, typical for that time frame. Suddenly I had a reverse mortgage as the house was 'devalued' by some $50,000. I could not refinance and could not sell and niether I nor the bank had done anything wrong, stuff happens.

I cut a deal with the bank, let me market the house and get what I could while they FORGAVE the loan. Or, I'd stop making payments and they could go through the eviction process and end up with a 'trashed' house. They agreed. This was VERY early in the economic crisis phase of things and within a few months of MY deal the banks were NOT 'dealing' anymore. They pursued evictions and foreclosures with vigor as there were just to many homes on the market with a reverse mortgage. I shudder when I think about how that deal COULD have come out. I'd STILL be trying to pay off that loan I suspect.