BofA CEO Moynihan: Some People Shouldn't Think Of Their Home As An Asset

CHARLOTTE, North Carolina (By Joe Rauch) - U.S. homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday.

Moynihan, CEO of the largest U.S. bank, said at a state attorneys general summit that low population growth in some regions of the country indicated that prices might not rise in the wake of the worst financial crisis since the Great Depression.

"It's sobering to think, but some people shouldn't be thinking of (their home) as an asset," Moynihan said at the 2011 National Association of Attorneys General conference. "They should be thinking of it as a great place to live."

Moynihan said the long-term average annual rise in post-war U.S. home prices of 4 percent owed much to the explosion in domestic population and, in more recent times, the relaxation of credit standards across the mortgage industry.

"The reality is that the population is not expected to grow the way it did post World War I and World War II," he said.
Moynihan noted an Ohio customers' complaint that his 100-year-old home was valued at $50,000. The home,
Moynihan said, would be valued as "some multiples of that figure" if it were located elsewhere, but stagnant population levels in the state are driving demand and home prices lower.

The conference included many of the state attorneys general currently engaged in negotiations with BofA and other lenders about a broad settlement to allegations that the industry cut corners on foreclosures.

Moynihan said during his prepared remarks that he had spoken with the attorneys general about industry issues, but declined to comment further about the discussions.

(Reporting by Joe Rauch; Editing by Lisa Von Ahn)

Copyright 2010 Thomson Reuters. Click for Restrictions.

Comments

[The Rogue Star]

02:01 PM on 04/18/2011

He is right, get used to an idea that the only things you can call yours are the ones you actually own free and clear i.e. a house is your asset when you are no longer making payments on it.

[ReesieKitty]

03:26 PM on 04/14/2011

This is true. BOA holds our underwater mortgage and although we've never missed a payment, they will not work with us at all on re-negotiating our mortgage. Yes, we need to look at our house as 'a great place to live' because the alternative is to look at it as 'a money pit that is no longer worth the amount of the mortgage we are paying, but which is essentially unsellable because it needs work, etc.' We want to stay in our house, but pardon me if we don't appreciate being TOLD how to feel about it by the president of BOA. I have a feeling HE is not losing any money on his house or anything else right now.

[bluepond]

11:03 AM on 04/14/2011

Sadly, this is probably true. That doesn't make it right, just true.
With the number of adult children having to live with their parents rather than buying a home, with the number of boomers about to downsize for their retirements, and putting their houses on the market to finance them, with the difficulty of getting loans, and with the number of unemployed about to skyrocket with government layoffs, there will be way more supply than demand for some time. Oh yeah, and the incredibly shrinking birthrate that will happen as people are depressed over the general economy will stifle the housing market in the more distant future. Witness other countries who have already been through this.
My only comfort is that the real estate and banking industry will feel some pain, too, from the falling prices which effect their bottom line in the end.

[spinotter11]

06:17 PM on 04/15/2011

affect

[builderman55]

10:37 AM on 04/14/2011

And thank you, to one who's company helped to make that dim scenario into a reality. It was, after all, TBTF banks and Wall Street that so completely destroyed the American mortgage industry, once the shining example of a solid, sound middle class investment. And of course they did so with ample government assistance, thanks to the GOP/Greenspan mantra of, deregulate, deregulate, deregulate, a large vat of Kool-Aid that the Democratic Party drank from as well...

[rMatey]

10:26 AM on 04/14/2011

I guess I'm going to have to agree with this. How can you count your house as an asset when the worth is a negative number.

Underwater anyone????????

[spinotter11]

06:17 PM on 04/15/2011

A little dollar and cents obsessed, anyone?

[blacksmithn]

10:23 AM on 04/14/2011

And maybe some people should think of modern banking as a legitimate business only in the sense that the Mafia is one.

[vindrag]

03:42 PM on 04/14/2011

I think you are on to something.

[Jazz88105]

08:38 AM on 04/14/2011

Another way to change middle class America into working poor America ' your home is not an asset ( unless your rich) it's just pretty to look at. I wonder what he thinks when he looks at himself in the mirror.

[yetiwatcher]

07:04 AM on 04/14/2011

some people shouldn't run banks, or really anything else of importance,
some people should be in prison for their white-collar crimes of epic proportions,
but really, a ton of fraudulent loans, securities with bogus ratings, and foreclosures on faked or missing deeds don't really matter when everyone in power is willing to look the other way,

some people like Moynihan would off themselves if they had a conscience, but they don't

[spinotter11]

06:19 PM on 04/15/2011

So the best you can say about the house buyers is that they are a bunch of chumps who fell for the greed-inspired tricks.

[irochfpst]

11:48 PM on 04/13/2011

hmmmmm! that is not what they have been telling us for years. if our homes aren't assets how can you collateralize the loan?

[Chevalier Dupin]

09:54 AM on 04/14/2011

They are assets. He stated that You (the owner) shouldn't think of it in those terms. I would have said it this way... "Your primary residence shouldn't be thought of as a long term investment. While it is an asset, it is not primarily a financial investment. The fact that some may see a positive net return on such investments is irrelevant.

[lvdragonlady]

08:41 PM on 04/13/2011

Good grief, what planet is this guy from anyway?

[Ricardo01]

06:59 PM on 04/13/2011

What he meant is that you should think of your home as a B of A asset. Because that's how they think of it.

[ReesieKitty]

03:27 PM on 04/14/2011

Exactly- they continue to collect the same payment from us every month, even though we will NEVER recoup the value of our mortgage. It is an asset- just not for the people who pay the mortgage.

[builderman55]

05:53 PM on 04/13/2011

Why do we care what the head of a criminal enterprise has to say about the housing situation?

[spinotter11]

06:19 PM on 04/15/2011

He's powerful and he helps to make the economic playpen that you live in.

[FriendsOfAngelo]

05:04 PM on 04/13/2011

Corporations are not assets either to this country so let them fail. Only the good ones will
stay in business

[Kestrel10]

04:11 PM on 04/13/2011

The house that you live in and own is a liability. It always has been. You don't make money from it and you spend a lot of time and money maintaining it. As much as I dislike B of A and pretty much any other bank, he is absolutely right. Growth in the US economy and the increase in home prices has been a result of an growing national population. Our population growth has slowed and our only current is from immigration. The days of easy money in America are probably over.

[james rimes]

04:19 PM on 04/13/2011

Can you Find the Asset?
http://www.youtube.com/watch?v=_opFvLpMHl4

[Renlim]

04:09 PM on 04/13/2011

Homeowners should start to think of it... as the Wall Streets Banks asset only... and just start thinking of it as renting in the form of your mortgage on the Banks Home Closures that the Banks received from there other home renters... until we the Banks decide to evict you and move in another renter.