How bad can it get? Investment adviser John Mauldin recently published a month-by-month account of the dollar amount of mortgages that will be reset through 2008, and the largest reset amounts pop up in the first six months of next year. In fact, as he points out, the $197 billion of mortgage resets so far this year is "less than we will see in two months (February and March) of next year. The first six months of next year will see more than the total for 2007, or $521 billion."
So, we haven't even begun to feel the pain yet. It's bad enough for the folks who will find that they can't keep up with the higher mortgage payments and will have to move out of their homes. It's almost the same as homeowners trying to find buyers for their homes – nearly impossible in a market where home prices are falling.
The Fed can try to calm such fears all it wants by lowering the discount rate and giving banks more time to pay back loans (from overnight to 30 days), but the real problem can't be fixed with more access to credit. The fact is nobody wants any more of that. What they really want is cash to pay off their debts. And the bad news just keeps accumulating:
Housing prices dropped 3.2% percent in the second quarter compared with last year, the largest drop since Standard & Poor's started tracking home prices in 1987.

Since last Thursday's mortgage industry relief rally in the stock market, the shares of the big lending companies have resumed their swoon. The reason? The U.S. housing industry keeps getting sicker. Observers are starting to wonder what favorable terms Bank of America's http://bankofamerica.com/ 2 billion wrung out of struggling Countrywide. It appears the end is not so near. According to the minutes from their last meeting, the Fed said that the worsening mortgage situation could lead to a housing slump deeper and more prolonged than it had seemed earlier this year.

Vojak, Team Player

I work with SellSmart Mackey Real Estate and Mackey Real Estate, Inc.
Our Web Presence is the BEST in Nevada County!
Maximum Exposure, Maximum Traffic, Maximum Results

FULL SERVICE REAL ESTATE
We do more... Charge Less

Experienced!
Mackey Real Estate, respected for over 30 years in Nevada County Real Estate)

Expert in Negotiations and Contracts

I work for two companies in One!
SellSmart Mackey Real Estate is our brand for residential Real Estate and
Mackey Real Estate, Inc. for all Land and Commercial.

Contact me or my office for stellar Nevada County Real Estate Services.

Welcome

Hi, this is Vojak. It is my 1st Weblog and I hope to have relative discussions about Nevada County real estate. Please feel free to add add you thoughts, observations or questions regarding Nevada City or Grass Valley or anything real...estate.