I'm not blind to the fact that real estate financers can go belly-up if the real estate market crashes. In fact I've seen it in person, back in the 1980s here in Alaska when houses lost about half of their value, people were handing the keys back to the bank in lieu of foreclosure, and about half the banks in town failed. But the reason real estate went down so badly, was that the local economy tanked. Oil prices dropped, with the result that oil companies and state government sliced jobs, which resulted in a lot of people moving out of state because they couldn't pay for groceries, let alone the mortgage.
I don't see anything like that happening in the US right now. People still have jobs, and people very rarely walk away from mortgages unless they absolutely have to. If the market was a little bit overleveraged, it may come down a bit, but we're surely not looking at a complete real estate crash.
One company, AHM, tanked. Rather than take that as an indication that the company was doing something wrong, investors are jumping to the conclusion that the entire mortgage lending industry is about to crash. I can't see it. |
