Russ,
that article is an excellent illustration of why we are in a nationwide credit bubble misreported as a real estate bubble.
All the attention is erroneously focused on Florida, California, Nevada when it should be directed at any state that the subprime lenders are active, and where all the lax underwriting guidelines have been utilized to fund loans.
In fact, I suspect that the so called real estate bubble may burst first burst in areas where we least expect.
e.g. joe6pak in Orange County pushed themselves over the limit on a property 18 months ago using all the "risk layering" strategies. Now they have a cash flow problem and their 2/28 loan is about to recast. They may have two options. 1) Sell. The last 18 months should have given them enough cushion to cover cost and may even put a dollar or two in their pocket. 2) They may have enough equity to refi into another loan, pushing off the problem for another year or two.
joebob6pak in Tennessee, however, may not have enough appreciation for either option to work.
I know the prices are different, affordability better, no bubble, blah blab blah, but bottomline is, joebob6pak is just as extended as joe6pak. This is probably happening now, just that no one pays attention to it. FHA probably knows the answer with their in house delinquency data.
In either case, we should be getting actual data by the time GREBB day rolls around. |
