I read about the non-conforming loan issue last week, I’m trying to find the article and I’ll post the link when I get it. There is some talk of it over at Ben Jones’ blog (see “the end of an era”):
Basically the point is that mortgage brokers are going to have a much harder time selling non-conforming loans to be bundled into MBSes. Default rates on non-conforming loans are higher than those on conforming and MBS issues with non-conforming loans in them have become very unpopular.
And even IF you can get a non-conforming loan for that hypothetical 600K house, the numbers are just going to be that much worse. Instead of a $3800/mo outlay it’s gonna be even more.
2000 prices in inflation-adjusted dollars at the bottom, that’s where we’re headed.
