[PassedOut]

Al_U_Card, on Dec 20 2007, 07:39 AM, said:

btw shouldnt credit card debt at 20+ % pa count as usury and arent there laws against that?

Usury for sure, but the laws have gradually been changed to allow it.

[ArcLight]

This will explain the Sub Prime situation

http://www.youtube.c...h?v=SJ_qK4g6ntM

This will help explain teh US invasion of Iraq

http://www.youtube.c...h?v=Ptzml1qQvZE


People can't afford to pay the new (higher) interest.
They can not sell their house without taking a large loss.
Can't stay, must go. Someone takes a loss.


>>Suppose a guy buys a house for $500,000 and there is a 10% drop in value These figures are pretty realistic these days. In a sense, he can save $50,000 by telling the bank to take this house and shove it. But he has to live somewhere. Even at the height (or depth maybe) of mortgage nonsense I don't think people with foreclosures on their records were finding it easy to get a new mortgage.

1. the lender can come after you, depending on the loan and jurisdiction.

2. Even if you are able to get away the IRS will count that as $50,000 of income and charge you taxes. Yes, thats right, you may owe taxes on a loss.

3. the banks originated the loans and then sold them. Most banks don't retain 100% of all loans they originate. The investors who bought these loans will get killed, depending on the seniority of the bond.


>>To throw another thought into the mix: In some ways, the collapse of the housing market is (or at least in some ways could be) a good thing. With houses getting back to realistic prices it might mean that people can afford to get in. They will no longer be able to do it with the so-called creative financing but if they have a sound financial setting then they can get a sensible mortgage on a sensible house that is going for a sensible price. Of course if everyone is out of work from the depression then this optimistic scenario falls flat.

While I have little sympathy for teh investors, and for most of the borrowers, some were mislead (and cheated). The problem with a mass melt down is it harm many others, and other industries. It better to have a gradual decline rather than 2 million foreclosures.

I am really annoyed at the idea of a government bailout in the form of guaranteed loans for thes epeople. Why should my (tax payer) money be used to bail out a speculator. Maybe suspend teh taxes on the losses, or provide some liquidity, but no way should the goverment bailout a home owner. The borrowers were hoping they could refinance before their rate adjusted. Too bad. You took a gamble and lost. If you go bankrupt for a stupid decision thats your problem.


>Many people feel that they are safe because they've used derivatives to hedge various positions, but if the people on the other side of the positions can't pay then even the hedges fall apart and chaos ensues.

As some large banks are just realizing with the down grading of large insurance companies. CIBC will have to take an additional 2 Bil in losses becaus ethe insurance company that guaranteed them ahs been downgraded to CCC.

[P_Marlowe]

Fluffy, on Dec 20 2007, 06:26 AM, said:

I that's true isn't it wort it to lose your house and buy it on the auction?

Gerben mentioned the mayor reason.

And depending on the laws, the bank will
get the house and sell it, but this does not
mean (!), that you got rid of your complete
loan, at least in Germany you still owe the
bank the missing money, ...
unless you declare your self bancrupt, which
requires that you make your finnacial situation
public, and you are under surveilance for a
couple of years.

With kind regards
Marlowe

PS: And of course you may not get your house
back at a cheap price.
Afterall an auction is open to all.

[sceptic]

if someone cant afford the mortagae where are they going to get the money to buy the house at auction, if they cant afford the repayments, surely they cant afford to buy the house

It would appear to me you are thinking too much, there are easier ways and certainly more legal ways to earn money

[helene_t]

My parent lived with their parents until they had finished their education and got decent jobs.

I left my mother's house when I was 18 and started earning real money when I was 20, and many young people had an even longer gab.I think it's the same today, except that young people have even more expensive "needs" today than they had when I was young.

A colleague of mine who is from Italy found it very strange that I never received any financial support from my parents since I was 18 and that that's more or less the norm in Denmark (in fact I payed for my own food etc. since I was 16 although mummy payed the rent). She says that in Italy it's quite normal to be dependent of your parents until you are 35.

My point is that the breaking-up of the bonds between generations make young people more susceptible to taking loans.

Also, back in the 70s when inflation was 12% p.a. your dept, if you had any, was soon degraded by inflation.

[bid_em_up]

Gerben42, on Dec 19 2007, 06:07 PM, said:

I work on the same principle. I recently bought a car, this was my first big investment. But only after I got the corresponding job to be able to finance said car.

I will assume you did not mean this the way it reads.

A car is not an investment (unless it is some sort of classic/antique vehicle).

A car is liability (until that loan is fully paid off). And even after its paid off, it has depreciated in value and will usually continue to do so with the passage of time.

An investment is an asset that (hopefully) will appreciate in time.

[joshs]

Defaults typically occur when two conditions are met:
a. The person has negative equity (owes more than the home is worth)
b. The person is unable to make payments

Condition a is a logical necessity since if your home is worth more than what you owe and you are "considering" defaulting you have a choice between
1. defaulting, getting nothing and having your credit rating ruined
or
2. selling the home, collecting the difference between what the home is worth and what you owe, and preserving your credit rating

Since 2 is better in all respects then 1 you always choose 2.

Now, even if you have negative equity, you still might (rationally) choose to not default if you think the value of your credit rating exceeds the difference between what the home is worth and what you owe.

Now as a matter of psychology/ideas about responsibility and so on, most people will not default even if they rationally should (negative equity exceeding value of credit rating), hence condition b is almost a necessity.

What happens when home prices drop is that:
the number of people who can't pay stays the same, but out of those, many more of them will meet condition a and not have equity in the home so they have to default since they can't sell.

I hope this helps.

Note: One of the common scams in recent years is appraisal fraud.
Person A has a home worth 400K
He agrees to sell it to person B for 500K while getting an appraisal saying the home is worth 500K.
Person B gets a loan for 500K (0% down) by a bank who believes the appraisal.
Person A gets paid the 400K
A and B split the 100K.
B skips town and defaults.
(Probably B did this scheme multiple times at the exact same time, so that these transactions did not occur on his credit report)

[bid_em_up]

kenberg, on Dec 20 2007, 09:18 AM, said:

People who own houses and rent them out, especially those who do it as a business rather than a temporary convenience, will no doubt be inclined to walk away if the house value falls below the mortgage debt. But for the guy who bought a house to live in? Where does he go? If he has a choice, that is if he is able to make his payments on the mortgage, I would expect him to make a rational choice. He has neighbors, his kids go to school, if he keeps paying he will someday own it, etc. It seems to me that the gap between the value of the house and the amount of the mortgage would have to be huge for this to overcome all the reasons that he has to stay put and ride it out.

The person who buys houses and rents them out is usually not bothered by fluctations in the value of the house. He will not be the one walking away from the property. If anything, he will be out buying more properties at the (now) distressed/fire sale prices.

People who buy properties for rental purposes, usually will:

1) know the market
2) look for houses for sale from people who were already in a distressed situation (divorce, loss of job, bankruptcy, etc.) where the property can already be purchased at 30-50% discount.
3) Is normally more concerned with cash flow (a steady income stream) that pays the mortgage
4) understands that with the passage of time the house will probably reappreciate eventually.

He doesn't care if other $200k houses in the area are now selling for $150k, as he most likely purchased his property for $150k initially. He doesn't intend to sell the property (at least not in the near future), but instead to rent it for a long period of time having someone else pay essentially pay the mortgage on that property for him. In the end, he has a house that has been paid for by someone else, all the equity in the home is now his, and he has steady income stream at this point of whatever the rent is.

[pclayton]

hrothgar, on Dec 20 2007, 05:25 AM, said:

kenberg, on Dec 20 2007, 03:45 PM, said:

Suppose a guy buys a house for $500,000 and there is  a 10% drop in value These figures are pretty realistic these days. In a sense, he can save $50,000 by telling the bank to take this house and shove it. But he has to live somewhere. Even at the height (or depth maybe) of mortgage nonsense I don't think people with foreclosures on their records were finding it easy to get a new mortgage.

My understand is that a fairly significant number of people walked away from their mortages the last time the housing market imploded

I suspect that Phil might be in a good position to answer this given his background in real estate (admittedly he does commercial, not residential)

Just because someone faces a paper loss in their home's value doesn't mean they walk from it. On the other hand, it feels 'wrong' to service a loan that greatly exceeds your property's value.

Homeowners and lenders face many tough decisions. Banks do not want to ever foreclose. It costs a lot and it is very time consuming. The loan also goes on their default list which gets the bank in hot water with regulators. Please note that I am using 'bank' somewhat euphemistically; it might mean Bear Stearns / EMC Mortgage.

Banks are usually willing to reduce the loan amount to get out from under a an upside-down loan, but only after the loan is in default. Usually banks will not reduce the principal unless there is a pay-off involved. Furthermore, lowering the principal amount results in phantom taxable income to the borrower.

We bought our 1st home in 1992 during the last down cycle from a company that held the 2nd TD on a property and foreclosed. In this case, it was very unusual since the 2nd greatly exceeded the 1st TD. The company had to come out of pocket every month to pay the 1st and the property taxes to keep their position intact. They really wanted to make a deal, so we bought the home for about 30% off its peak value and for about 3% down. I even pulled a 'cram-down' a few years later - where the bank restructured the mortgage because I sure as hell wasn't going to service a debt for more than the property's value.

Luckily we sold our home 18 months ago and we are now renting, but we pulled out at a good time. I'm waiting for the market to come back, but unfortunately my job was a casualty of this market and I'm looking for another.

In certain areas, this market will continue to be a bloodbath. The California central valley and places in Florida will have depression-type conditions for awhile.

Where I live, its just too desirable of a place for values to stay down for too long. Affordable or not, LA / Orange County is still the place many people want to live, and the economy will not feel the swings as much.

1997-2005 was a white hot market in many places. You'll see plenty of adjustments.

What I tell people is that the market will suck for at least another 12 months (we are in our 25th month of a decline currently). Check with me in early 2009. I think many things could happen that may brighten the outlook, like a change in the White House, situation in Iraq, etc..

[pclayton]

P_Marlowe, on Dec 20 2007, 08:30 AM, said:

Fluffy, on Dec 20 2007, 06:26 AM, said:

I that's true isn't it wort it to lose your house and buy it on the auction?

Gerben mentioned the mayor reason.

And depending on the laws, the bank will
get the house and sell it, but this does not
mean (!), that you got rid of your complete
loan, at least in Germany you still owe the
bank the missing money, ...
unless you declare your self bancrupt, which
requires that you make your finnacial situation
public, and you are under surveilance for a
couple of years.

With kind regards
Marlowe

PS: And of course you may not get your house
back at a cheap price.
Afterall an auction is open to all.

It doesn't work this way in the US.

There are two types of foreclosures: Judicial and Non-Judicial.

A Non-Judicial foreclosure is used in 99% of the cases. The property is put on the auction block and the bank can bid up to the value of its loan + costs. It is a relatively quick process - 4-5 months, but the bank can't go back after the borrower for any shortage. The property is the only security for the loan, the bank can't go back and get a 'default judgment'. If after the property sells and the bank still hasn't collected its loan, its SOL.

Rarely, the bank will have a huge shortfall, and the borrower will have a significant financial statement where it pays to go back and get a judgment for the balance. This assumes the loan documents allow it, and the borrower has something to go after. It is also a much slower process, since the 'judicial' foreclosure doesn't get any priority on the court calendar, so it can take 18 months or so.

[joshs]

bid_em_up, on Dec 20 2007, 02:52 PM, said:

kenberg, on Dec 20 2007, 09:18 AM, said:

People who own houses and rent them out, especially those who do it as a business rather than a temporary convenience, will no doubt be inclined to walk away if the house value falls below the mortgage debt. But for the guy who bought a house to live in? Where does he go? If he has a choice, that is if he is able to make his payments on the mortgage, I would expect him to make a rational choice. He has neighbors, his kids go to school, if he keeps paying he will someday own it, etc. It seems to me that the gap between the value of the house and the amount of the mortgage would have to be huge for this to overcome all the reasons that he has to stay put and ride it out.

The person who buys houses and rents them out is usually not bothered by fluctations in the value of the house. He will not be the one walking away from the property. If anything, he will be out buying more properties at the (now) distressed/fire sale prices.

People who buy properties for rental purposes, usually will:

1) know the market
2) look for houses for sale from people who were already in a distressed situation (divorce, loss of job, bankruptcy, etc.) where the property can already be purchased at 30-50% discount.
3) Is normally more concerned with cash flow (a steady income stream) that pays the mortgage
4) understands that with the passage of time the house will probably reappreciate eventually.

He doesn't care if other $200k houses in the area are now selling for $150k, as he most likely purchased his property for $150k initially. He doesn't intend to sell the property (at least not in the near future), but instead to rent it for a long period of time having someone else pay essentially pay the mortgage on that property for him. In the end, he has a house that has been paid for by someone else, all the equity in the home is now his, and he has steady income stream at this point of whatever the rent is.

Well, sometimes its hard to tell the difference between someone who initially intends on using the property to generate rental incomes vs a flipper (someone who intends on reselling the property as fast as possible).

But having said that, there are very few individuals who buy a property only for rental purposes these days because property values in most of the US currently are so high that the mortgage payments exceed (and often by a lot) the rental value of the home (also note you will have vacancy's some % of the time and you have maintainance costs, so you need to be making a significant profit the rest of the time to make up for those factors). Thus even the renters are usually just spectulating on the housing market, while trying to reduce there costs by renting out in the mean time. Basically they are betting that the gains from HPA make up from the losses from renting.

see: http://www.housingtr.../affordability/
for median rent to mortgage payment ratios for major US metropolitan regions.

The other thing to note, is if someone wants to buy multiple properties to rent (or buy an apartment building to rent) they usually set up a Limited Liability Company so that they can default if there equity goes negative without any consequences for themselves.

[Echognome]

You don't have to cover your mortgage to make a profit, because you are still building equity. However, I agree there are additional costs involved. You will want some insurance on the building (or unit), all maintenance, and if your tenant doesn't pay the rent, guess what, it's a pain in the butt to evict.

As far as cities where the rent is high compared to owning, I remember Washington, D.C. being the case. (I haven't checked Josh's link.) But think about it. Lots of students, lots of foreign diplomats. That means people wanting to live there temporarily.

[joshs]

pclayton, on Dec 20 2007, 03:16 PM, said:

P_Marlowe, on Dec 20 2007, 08:30 AM, said:

Fluffy, on Dec 20 2007, 06:26 AM, said:

I that's true isn't it wort it to lose your house and buy it on the auction?

Gerben mentioned the mayor reason.

And depending on the laws, the bank will
get the house and sell it, but this does not
mean (!), that you got rid of your complete
loan, at least in Germany you still owe the
bank the missing money, ...
unless you declare your self bancrupt, which
requires that you make your finnacial situation
public, and you are under surveilance for a
couple of years.

With kind regards
Marlowe

PS: And of course you may not get your house
back at a cheap price.
Afterall an auction is open to all.

It doesn't work this way in the US.

There are two types of foreclosures: Judicial and Non-Judicial.

A Non-Judicial foreclosure is used in 99% of the cases. The property is put on the auction block and the bank can bid up to the value of its loan + costs. It is a relatively quick process - 4-5 months, but the bank can't go back after the borrower for any shortage. The property is the only security for the loan, the bank can't go back and get a 'default judgment'. If after the property sells and the bank still hasn't collected its loan, its SOL.

Rarely, the bank will have a huge shortfall, and the borrower will have a significant financial statement where it pays to go back and get a judgment for the balance. This assumes the loan documents allow it, and the borrower has something to go after. It is also a much slower process, since the 'judicial' foreclosure doesn't get any priority on the court calendar, so it can take 18 months or so.

Actually there are two distinctions:
Judicial vs Non-Judicial Forclosures is one
The other is Recourse vs Non-Recourse loans
You sort have combined the two into one idea

The standard mortgage contract is a recourse contract. That is you have borrowed $X and have agreed to pay this money back. If you do not, the bank lays claim (holding a lien) to your property and sells it. Giving them your property does not eliminate there claim for $X. If you borrow 200K, and they foreclose, and sell the property for 150K you can still sue for a definciency settlement for the other 50K.

Now having said that, this doesn't happen much for two reasons:
1. Most of the western states (including CA) passed laws back in the depression against definciency claims on home mortgages. These laws effectively convert to mortgage contract from a Recourse to a Non-Recourse loans. Note though that these laws really are mostly in the western US.
2. Most people who default don't have any money, so its a waste of time and money (legal costs) to go after them....


For Judicial vs Non-Judicial see:
http://www.all-forec...om/judicial.htm

Its really mostly about the forclosure process (and property auction process) and disposition of the property and not about the debt.

[joshs]

Echognome, on Dec 20 2007, 03:41 PM, said:

You don't have to cover your mortgage to make a profit, because you are still building equity. However, I agree there are additional costs involved. You will want some insurance on the building (or unit), all maintenance, and if your tenant doesn't pay the rent, guess what, it's a pain in the butt to evict.

As far as cities where the rent is high compared to owning, I remember Washington, D.C. being the case. (I haven't checked Josh's link.) But think about it. Lots of students, lots of foreign diplomats. That means people wanting to live there temporarily.

Yes you have to do the calculation carefully, and also include the carrying cost for your down payment (which you could have gotten a tresuary bill or stocks or a CD or whatever with that money).....

Let me give a DC example. My friend has a 1200 Sq foot home in Alexandria is currently valued at about 750K.
With 20% down (150K), you would get a mortgage for 600K. Let me assume 7% interest (Jumbo loans have higher interest rates) and we have monrthly payments of $4000/month. Of this $500 is principle, so that part is effectively paid to yourself. Yet you are paying $3500/month in interest plus about 900/month in property taxes and insurance, plus whatever maintaince costs you have.
Further, absent home price appreciation you have tied up $150 in the house instead of getting 5% interest on it which is $7500/year or about $600/month.

So even if you are paying $0 mainatance, you need to rent this propery out for $5000 per month to break even. I assure you that the rental values is half that. You might buy the house and rent it out, but you are betting that your equity is increasing by at least an additional $2500 a month do to home prices going up....

800 Sq Ft Condos downtown which would rent for $1500-$1800, sell for $400-$500K plus a monthly condo association fee. Just run the math, buying is much more expensive then renting ...

[mike777]

bid_em_up, on Dec 20 2007, 02:52 PM, said:

kenberg, on Dec 20 2007, 09:18 AM, said:

People who own houses and rent them out, especially those who do it as a business rather than a temporary convenience, will no doubt be inclined to walk away if the house value falls below the mortgage debt. But for the guy who bought a house to live in? Where does he go? If he has a choice, that is if he is able to make his payments on the mortgage, I would expect him to make a rational choice. He has neighbors, his kids go to school, if he keeps paying he will someday own it, etc. It seems to me that the gap between the value of the house and the amount of the mortgage would have to be huge for this to overcome all the reasons that he has to stay put and ride it out.

The person who buys houses and rents them out is usually not bothered by fluctations in the value of the house. He will not be the one walking away from the property. If anything, he will be out buying more properties at the (now) distressed/fire sale prices.

People who buy properties for rental purposes, usually will:

1) know the market
2) look for houses for sale from people who were already in a distressed situation (divorce, loss of job, bankruptcy, etc.) where the property can already be purchased at 30-50% discount.
3) Is normally more concerned with cash flow (a steady income stream) that pays the mortgage
4) understands that with the passage of time the house will probably reappreciate eventually.

He doesn't care if other $200k houses in the area are now selling for $150k, as he most likely purchased his property for $150k initially. He doesn't intend to sell the property (at least not in the near future), but instead to rent it for a long period of time having someone else pay essentially pay the mortgage on that property for him. In the end, he has a house that has been paid for by someone else, all the equity in the home is now his, and he has steady income stream at this point of whatever the rent is.

Indeed people are buying homes, renting them out while they try and flip them and then walking away.
Renters/families are then kicked even if they pay the rent on time and in full. This is happening now.

The rents never cover the mortgage and taxes for these flippers.

[Echognome]

joshs, on Dec 20 2007, 01:02 PM, said:

Let me give a DC example. My friend has a 1200 Sq foot home in Alexandria is currently valued at about 750K.
With 20% down (150K), you would get a mortgage for 600K. Let me assume 7% interest (Jumbo loans have higher interest rates) and we have monrthly payments of $4000/month. Of this $500 is principle, so that part is effectively paid to yourself. Yet you are paying $3500/month in interest plus about 900/month in property taxes and insurance, plus whatever maintaince costs you have.
Further, absent home price appreciation you have tied up $150 in the house instead of getting 5% interest on it which is $7500/year or about $600/month.

So even if you are paying $0 mainatance, you need to rent this propery out for $5000 per month to break even. I assure you that the rental values is half that. You might buy the house and rent it out, but you are betting that your equity is increasing by at least an additional $2500 a month do to home prices going up....

800 Sq Ft Condos downtown which would rent for $1500-$1800, sell for $400-$500K plus a monthly condo association fee. Just run the math, buying is much more expensive then renting ...

You are missing one important item: income taxes.

Yes you have to pay a property tax + insurance, but you work that into your monthly mortgage.

Here's a calculation I made for myself.

I can put $200k down and get a mortgage on a place for say $3k-$4k/month. If I do that, the govt will basically kick in about $1k/month in tax savings.

If I rent instead, I can receive say 5% on my $200k (at zero risk) and rent for say $2k a month. So you'd think by renting I earn lets say just under $1k/mth in interest the other way. But, I now have to pay taxes on the interest I earn! And I'm achieving no equity.

So income taxes are really set up for owning rather than renting.

[joshs]

Echognome, on Dec 20 2007, 04:30 PM, said:

joshs, on Dec 20 2007, 01:02 PM, said:

Let me give a DC example. My friend has a 1200 Sq foot home in Alexandria is currently valued at about 750K.
With 20% down (150K), you would get a mortgage for 600K. Let me assume 7% interest (Jumbo loans have higher interest rates) and we have monrthly payments of $4000/month. Of this $500 is principle, so that part is effectively paid to yourself. Yet you are paying $3500/month in interest plus about 900/month in property taxes and insurance, plus whatever maintaince costs you have.
Further, absent home price appreciation you have tied up $150 in the house instead of getting 5% interest on it which is $7500/year or about $600/month.

So even if you are paying $0 mainatance, you need to rent this propery out for $5000 per month to break even. I assure you that the rental values is half that. You might buy the house and rent it out, but you are betting that your equity is increasing by at least an additional $2500 a month do to home prices going up....

800 Sq Ft Condos downtown which would rent for $1500-$1800, sell for $400-$500K plus a monthly condo association fee. Just run the math, buying is much more expensive then renting ...

You are missing one important item: income taxes.

Yes you have to pay a property tax + insurance, but you work that into your monthly mortgage.

Here's a calculation I made for myself.

I can put $200k down and get a mortgage on a place for say $3k-$4k/month. If I do that, the govt will basically kick in about $1k/month in tax savings.

If I rent instead, I can receive say 5% on my $200k (at zero risk) and rent for say $2k a month. So you'd think by renting I earn lets say just under $1k/mth in interest the other way. But, I now have to pay taxes on the interest I earn! And I'm achieving no equity.

So income taxes are really set up for owning rather than renting.

The main interest deduction applies when I buy a home and live in it. There are deductions assocaited with second homes (for instance the property tax is deductible, so efectively you are only paying 2/3 of the property tax rate and you can deduct maintance or depreciation ) the rules are slightly different.

I think there are deductions assocaited with interest on rental properties, but I am not certain exactly what the current rules are. I beleive its:
If you pay income taxes on the monthly rent you can write off the mortgage interest. So if you want to apply a factor of 2/3 here you can, but you need to apply it to both sides (income from rent * 2/3, and interest on the mortgage*2/3). The accounting here needs to be consistant....


Now if you are deciding to buy a home for personal use instead of renting, you do need to include the factor of 2/3. So in my DC example, you monthly costs of buying are:
500K paid to your self (so we don't count this)
$3500 in interest (which we multiply by 2/3)
$900 in inurance and property taxes (also deductible so we multiply by 2/3)
+Maintance
+Lost Interest on equity (Downpayment+ the $500/month you are paying to yourself in principle)

So this is 2/3*$4400=$3000 +Maintance and Carry Cost

This $3000 is more then the rent, so you need enough HPA to make up the difference as well as making up for the carrying cost and maintaince.

If you have bought and are renting out the property, like I said, the calculation is similar except that the rental income is taxable (which makes a big difference), so its similar to doing the whole calculation without the taxes modulo a factor of 2/3 on both sides of the equation, if we are just trying to figure out which of income and costs are larger...

[Echognome]

And don't forget capital gains.

It gets tricky when you sell when you are not owner/occupier.

[joshs]

Echognome, on Dec 20 2007, 05:32 PM, said:

And don't forget capital gains.

It gets tricky when you sell when you are not owner/occupier.

Yeah you need to live in the home for 2 years to avoid paying capital gains taxes on the selling price (although its prorated if you live in the home for part of it) if there is in fact a gain....

[helene_t]

That is something I have difficulty understanding - why so many governments subsidize house owners relative to renters, whether through tax deductions of interests or otherwise.

Maybe the clue is that the system is not very transparent so the renters continue voting for the politicians who screw them. Another reason could be that house owners are more aware of the system so you gain more votes from house owners than you lose from renters by making an owner-friendly tax system. A third reason could be that subsidies get introduced in times when the prices are falling and there is a need to support the market to avoid a cascade of bankruptcies. And once the subsidies are introduced they are difficult to abandon without getting unpopular.