125% Loan Sounds Risky

Now let me understand this: In “Real Estate Q&A;” (Sept. 5), a questioner took a 125% loan on a home and now has to move. The loan is more than the house is worth. When the homeowners sell, the price won’t cover the difference in what they owe.

How is this any different than in 1990 when the bottom dropped out of the real estate market and thousands of people found themselves paying off mortgages that were higher than the value of their homes?

What happens to those people holding 125% mortgages when or if housing prices fall in the future? The same thing, only worse?

I’ve been a homeowner for only five years or so, and I don’t view my house as an investment beyond the security it provides. Sucking all the equity out of it sounds like voodoo to me. Have I got something wrong here?

DAVID GREGORY

Van Nuys