[quote=peterb]This T2 Partners analysis is getting a lot of viewing since it was released. Resets may not be so bad if rates take a break.
But the studies that indicate people tend to dump their homes when they become upside down has got devistating consequences should it prove correct. The percentage of upside down mortgages in SD and around the country is in the 20-30 percentage point area.[/quote]
Supposedly, mortgage holders in the IE are 35-50% underwater. So, shadow inventory(what ever that may be) + foreclosure risk coupled with the softening job market and state budget problems. Option arm concentration is about 50% in CA and they work under a different set of rules that standard ARMs. CA budget deficit, w/unemployment benefits, is going to be 41 billion by the end of 2010. I think it is safe to assume this will have some affect. The job market is still softening and wages are deflating. Wage deflation keeps up and you don’t have a mean to revert to.
Maybe CA will get a bailout, shadow inventory is only a fraction of what the data bases say, job losses will stop tomorrow, rates will stay low and every upside down homeowner will get a loan mod. Who knows?
