If a homeowner's real-world equity is effectively zero, then what do they actually own? They own a mortgage, i.e. a promise to pay a debt. As long as they are current on payments, this acts more as a claim on future ownership, i.e. full ownership when the mortgage is paid off, or a long-term lease.
If their equity is 10% of the mortgage, there is no way to extract this equity short of selling the home, and the transactions fees will consume most of the 10%.
What the lender owns is A) a claim on the underlying property and B) the homeowner's income stream, much of which flows to the lender via mortgage payments.
Is this arrangement "widespread ownership" or is it cloaked neofeudalism? In credit bubbles, homeowners appear to benefit as their ownership claim is leveraged by the lender's capital into astounding profits. But alas, credit bubbles never last, and when they pop then the extra debt taken on to play the speculative leverage game remains to be paid.
If their equity is 10% of the mortgage, there is no way to extract this equity short of selling the home, and the transactions fees will consume most of the 10%.
What the lender owns is A) a claim on the underlying property and B) the homeowner's income stream, much of which flows to the lender via mortgage payments.
Is this arrangement "widespread ownership" or is it cloaked neofeudalism? In credit bubbles, homeowners appear to benefit as their ownership claim is leveraged by the lender's capital into astounding profits. But alas, credit bubbles never last, and when they pop then the extra debt taken on to play the speculative leverage game remains to be paid.
