As we have come to realize - many of us to our regret - a lot of the "equity" we were allowed to extract from our houses during the boom years didn't really exist.
Cashing out equity was, in fact, borrowing against the possibility, however unrealistic, that the value of our homes would be equal to or more than our mortgage balances - or the sum of all our loans - when we sold them.
About one-quarter of U.S. homeowners, it appears, bet wrong. That's about the percentage of owners whose houses are now worth less than their mortgage balances.
If you have a job and can afford to pay your mortgage and all your other debts every month, this situation, though stressful, isn't fatal.
If you need to sell your house for some reason, or just decide that you want to, it becomes a problem that leads to a short sale, in which the bank agrees to accept a sale price that is less than the mortgage balance.
If you are a child of Depression-era parents and grandparents, as I am, you would have spent a lot of your youth listening to stories of the hardships millions of Americans faced during the 1930s.
These people knew better than to borrow money against a house because some fast-talking banker told them it would never drop in value.
A house was a place to live. You took care of it and tried to pay off the mortgage as soon as you could.
Refinancing? It didn't exist in the Depression and only became useful later to cut high interest rates to better ones.
Every generation seems to get a wake-up call, however, and this one is no different.
In the second quarter of this year, Freddie Mac says, 77 percent of homeowners who refinanced first-lien home mortgages either maintained about the same loan amounts or lowered their principal balances by paying additional money at closing.
Of these borrowers, 51 percent maintained about the same loan amounts, and 26 percent of the refinancing homeowners reduced their principal balances.
