IT'S ALMOST LIKE HE SAVED SOME MONEY, EH?

Home equity could buoy economy: Borrowers who have built up their stakes could help keep the U.S. out of recession, despite troubles in sub-prime lending, economists say. (Molly Hennessy-Fiske, March 21, 2007, LA Times)

Steve Nguyen bought his first home, a three-bedroom ranch house in Lakewood, three years ago with a no-interest sub-prime mortgage. Since then, the sub-prime market has virtually collapsed, leaving many nervous about the housing market and the national economy.

But Nguyen, 31, is feeling confident. Though he figures his home's value fell at least $40,000 during the last year, he gained $200,000 in equity during the five-year boom. Thanks to that equity and his earnings as a project manager at UnitedHealthcare, he's qualified for a conventional 30-year fixed-rate mortgage on a $750,000 house he hopes to move to in Orange County after he sells his current home.

"It's at a good state right now," Nguyen said of the housing market. "It didn't completely crash on me."

Analysts say the U.S. economy won't completely crash either as a result of the sub-prime mortgage meltdown, thanks in part to homeowners like Nguyen. Their home equity built up during the boom is among several factors that could support consumer spending and the housing market.

Sure, but his savings account is empty....

Posted by Orrin Judd at March 21, 2007 6:10 AM