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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (22979)	12/7/2004 10:53:24 AM
From: Ramsey Su	Read Replies (5) \| Respond to of 110194

Ability to pay, that is always the issue. Each subprime loan made is stressing another borrower's ability to pay to the max. San Diego Union had a front page story in the real estate section "warning" consumers. signonsandiego.com The chain reaction could be brutal. Today's sales are tomorrow's comparables. Someone told me that the WSJ got article about the homebuilders regarding about increasing incentives, buying down interest rates, and in some cases price discounting. I do not have access. Anyone with access please post. HOV is reporting tonight. They have warned twice but stock price ignoring the warnings. We shall see. In previous real estate down cycles, a percentage of "investors" managed to hang on by renting out their investments and riding it out, converting these investments to "tax shelters". It may be difficult this time around as the McMansions are not very suitable as rentals. Rents would not be remotely close to the mortgage payments and taxes. In addition, renters for McMansions are hard to come by. Many would discover one couple fill out app only to find 3 families and 16 kids have moved in. The system had never been tested with this level of subprime loans. It may be ugly.