I’m a bugs fan. His posts are always to the point in a “big picture” way.
Now, lenders and the MSM are talking about giving homeowners reprieve by developing new “affordability” products.
I don’t see how payments can be reduced anymore than Interest Only and Option ARM loans (which are forever loans). They’re saying that owners with exotic loans should refinance into fixed rates loans. Yeah, sure! How are buyers who can’t afford payments on Interest Only and Option ARMs going to afford payments with fully amortized 30 year loans?
The existing loan products have stretched out repayment as much as possible already. There’s no way they can make the monthly nut anymore “affordable.”
The can can’t be kicked down the road any further. Even a stagnant or slightly declining market in 2007 will cause sellers to go under water (with selling costs and carrying costs). That will feed on itself and cause further depreciation in 2008.
