Here's an updated version of the mortgage reset chart via the Financial Times.
It really is amazing that this is just getting started and Sonoma County is ground zero.
Just look at these quotes from the article:
Sue Troll, credit analyst at T Rowe Price, who in 2006 forecast the subprime meltdown, describes Option ARM mortgages as “subprime on steroids with their underlying quality in many instances having been worse than subprime, despite involving higher quality borrowers”. She says approximately 80 per cent were low- or no-documentation.
Mr Tilson expects resetting Alt-A and Option ARM loans to push default rates even higher, further flooding the housing market, and putting further downward pressure on housing prices.
The implications of those resets are staggering. If the banks are buckling already, what will Wall St. look like in 2012? And we know the risk is not just those morts, but all the "investments" leveraged from that toxic waste. I fear there will be little left to finance a recovery.
ReplyDeleteIs it just me or does this scare the sh*t out of anyone else.
ReplyDeleteMy wife and I have been waiting patiently to buy a home. Does this mean prices will keep falling until 2012? or more important, are the banks even safe?
It is indeed scary. Good job holding off buying.
ReplyDeleteThe next shoe to drop in my opinion is going to be interest rates going up and the govt won't be able to do anything to stop it.
Whether this happens this year or next is anybody's guess. But when it does home prices will take another big jump down...