This is speculation here but think about this. Business Week had an excellent article on the Nightmare Mortgage. Probably one of the best articles to date concerning the topic of exotic loans. It had teeth. There is a reason they came out with that article along with all of these other articles concerning housing and that’s because the bulk of these exotic loans are beginning to reset now. From what I have read over 1 trillion dollars (I always think of Dr Evil with finger to mouth) will reset. Thats a big number impacting a large number of people. Now going back to the example of my aunt, her situation has sent shock waves throughout my family’s communication network. I see my family 2 to 3 times a year and the last couple of years they would just look at me cross eyed about my housing bubble views, Kind of like (has that boy gone crazy out there in California). My last visit in August all that changed among all the adults in my family, sisters, aunts, uncles, cousins. Now they are asking me questions about what I think will happen. They were in denial, then they saw what can happen with my aunt. They didn’t read that or see it on TV, it was somebody they know and care about. Now multiply that story by the number of people that will go into some form of default and foreclosure over the next 18 months. Also combine that with officially showing YOY price declines starting this Fall. Also combine that with the internet age of blogs. This thing is far beyond the FED easing a 1/4 point.
Regarding my aunt, yes she was counting on this investment as her retirement, she may be able to salvage one house with a little equity in it and she has two daughters that will look after her. She is still self employed with some income but this has been an extremely painful experience.
