[quote=spdrun]Why worry? If rates reset and we end up with a lot of short sales slamming prices down, it will be an opportunity to pick up cheap(er) r.e. before the gov steps in again and kicks the can further down the road.[/quote]
FWIW I don’t know how many more times the problem can kept on being kicked down the road. I have not figured it out but the various scenarios I game out are chaotic. Basically its a question of the fed being a one trick pony of printing more and more money, but each iteration seems have less and less bang for the buck (and then there is the question, how does this play out in say the dollar “oil” market)
Helocs (Home equity lines of credit) and HAMP (Home Affordable Modification Program) interest rate resets, bought time for many who managed to keep their homes after the first big wave wiped out many who had “liar loans.”
TPTB (a few years ago) I guessing had hoped the “recovery” would be further along (currently), but I’d bet many in the general public don’t feel things are getting better (unlike those at the top whose balance sheets have more than recovered).
Basically I see several trends like the loan resets, new pension accounting rules, etc., all converging and will build upon one another to produce the next economic downturn.
The economy as I see it, is not built on a sustainable foundation and changes in public pension accounting rules are all necessary steps to that end! BUT IMHO there is going to be unavoidable economic pain on the way to reaching that goal.
BTW here is another rule that will in the long run will dampen bubble behavior like “flipping” but in the short run might very well be a drag on the economy:
The Federal National Mortgage Association, more commonly known as Fannie Mae, will extend its mandated waiting period to qualify for a conventional home loan after a short sale from two years to four years.
