The impact of defaults will be large; but that will be greatly amplified by non-availability of large cheap mortgages. For example, if the 417K limit is strictly followed, practically all demand for homes pricier than that will vaporise. Imagine its impact on coastal markets. And add the wealth contraction effect implied by that. All those thinking they are sitting on 600K, 800K have to recalibrate their worth to 400K. That will bruise many egos and ability to splurge on jewelry, vehicles, vacations etc.,
