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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Proud Deplorable who wrote (61269)	8/31/2006 11:48:38 PM
From: John Chen	Respond to of 306849

ralph-emerson,re:"$10 trillion equity". "RE equity" means a 'loan' paid by someone else.

To: Proud Deplorable who wrote (61269)	8/31/2006 11:55:01 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 306849

Nightmare Mortgages They promise the American Dream: A home of your own -- with ultra-low rates and payments anyone can afford. Now, the trap has sprung businessweek.com For cash-strapped homeowners, it was a pitch they couldn't refuse: Refinance your mortgage at a bargain rate and cut your payments in half. New home buyers, stretching to afford something in a super-heated market, didn't even need to produce documentation, much less a downpayment. Those who took the bait are in for a nasty surprise. While many Americans have started to worry about falling home prices, borrowers who jumped into so-called option ARM loans have another, more urgent problem: payments that are about to skyrocket. The option adjustable rate mortgage (ARM) might be the riskiest and most complicated home loan product ever created. With its temptingly low minimum payments, the option ARM brought a whole new group of buyers into the housing market, extending the boom longer than it could have otherwise lasted, especially in the hottest markets. Suddenly, almost anyone could afford a home -- or so they thought. The option ARM's low payments are only temporary. And the less a borrower chooses to pay now, the more is tacked onto the balance. The bill is coming due. Many of the option ARMs taken out in 2004 and 2005 are resetting at much higher payment schedules -- often to the astonishment of people who thought the low installments were fixed for at least five years. And because home prices have leveled off, borrowers can't count on rising equity to bail them out. What's more, steep penalties prevent them from refinancing. The most diligent home buyers asked enough questions to know that option ARMs can be fraught with risk. But others, caught up in real estate mania, ignored or failed to appreciate the risk. MORE

To: Proud Deplorable who wrote (61269)	9/1/2006 9:38:13 AM
From: ChanceIs	Respond to of 306849

RE: "Pop Goes the Bubble!" Well!!!! There was certainly some spleen venting there. The article did state the facts accurately (I suppose). It then proceeded to assign fault and blame. Ending up stating that Bush's real intention is to be in control like Big Brother. Only the first 2/3 was worth the the read. I think that it is accurate to say that the FED printed money out the wazoo. This has to lead to inflation if we didn't use the printed dollars to expand our wealth creating capability. I don't think we have done that and that therefore we will have inflation. Mish thinks we will have deflation. He makes some very interesting arguments, I must admit. The way I see it the printed money is still out there and will cause inflation wherever it is directed. It is probably in the hands of smart people. Imagine selling at the top of the internet bubble and jamming it in real estate. A few must have done that. Is it possible to have average national deflation and local (real estate) inflation? I think so. For sure I believe that we will have massive real estate deflation. Will that result in nationwide deflation? Not as long as all that printed money is out there. Why does the author blame the FED for low lending standards? I don't think that the FED writes lending standards at a low level. I believe it writes and polices them at a high level - eg reserve requirements. I think that individual banks are more to blame for the loose lending. Thoughts??