First, it's this kind of thinking about housing which helped cause the bubble in the first place.
Home prices will keep falling and foreclosure rates nationally will keep rising at least until the end of next year, they said. And some predictions contend that the market won't right itself until 2010.
Implicit is the idea that when the market manages to "right itself" that housing prices will, as dictated by God and Nature, continue to appreciate. It's more appropriate to think of the market as righting itself now, as sticky too high prices finally begin to fall.
And this is just silly.
Government officials have offered many proposals to help struggling homeowners with subprime loans whose rates are scheduled to increase. Some industry observers, however, question how useful these measures will be, noting much of the legislation is bogged down in Congress. Before they take effect, some borrowers likely will have to give up their homes because they can't keep up with the payments, experts say.
We don't need any "experts" to predict something which is happening right now.
Lots of borrowers have already lost their homes - and their investment properties - and many more will do so over the coming months and years.
And this:
Subprime adjustable-rate mortgages are largely to blame for the current housing mess. Borrowers were able to purchase homes because these ARMs carried super-low interest rates at first. When they adjust, many homeowners may not be able to afford the higher monthly payments, leading to a spike in defaults and foreclosures.
Nearly 150,000 subprime mortgages are scheduled to reset each month through the end of next year, according to the Federal Reserve, causing the typical monthly payment to rise about $350, or 25 percent. Goldman Sachs, meanwhile, predicts that losses on outstanding loans could balloon to $400 billion, though some experts feel that number is too high.
While subprime has become a general term for "shitty loans," the fact is the problem isn't the subprime market specifically - buyers with poor credit - but all of the shitty loans with crazy terms that were being handed out to everybody. And while the coming reset wave - again, not just on subprime loans but on lots of shitty loans - isn't going to help things, a lot of the foreclosures are happening even before the resets occur. People were being given loans they couldn't afford from day 1.
The point is that a lot of the shitty loans weren't actually in the "subprime" category. They were given to people with perfectly decent incomes and credit at terms they couldn't possibly afford over the long run because the loan balances were too large and the interest rates, especially but not only once the teaser rates and payment schedules expired, were absurd.
(ht reader m)