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I have been warning about this crisis coming for the past two years. This will be nothing like we have ever seen and it will drive upscale housing into the ground over 2010-2011.
Can anyone say million dollar homes for 10-30 cents on the dollar? That is EXACTLY what is going to happen in Southern California.
http://www.businessweek.com/lifestyle/content/jun2008/bw2008065_526168_page_2.htm
Moe Bedard, founder of LoanSafe.org in Corona, Calif., a free online forum that helps homeowners negotiate loan modifications, said the larger problem is that banks, many of which laid off scores of loan officers, are so swamped that many borrowers can’t get the attention they need.
Many California homeowners, including some with $2 million homes, are simply making their minimum payment, waiting for the recast. Then they plan to walk away, even if it damages their credit, Bedard said.
“A lot of people are just walking,” Bedard said. “It’s just a business decision; they don’t have a lot of skin in the game.” But for many others it will be devastating.
http://www.slate.com/id/2188982/pagenum/all/
Yahoo News:
The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.
“Payment option ARMs are about to explode,” Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways to combat mortgage scams.
“That’s the next round of potential foreclosures in our country,” he said.
