I believe there are lots of people who have been living far beyond their means via the equity in their houses for the past decade
From the outside they look financially successful but a combination of factors is now biting them in the ass:
> house prices have dropped so there is no more equity to be extracted
> house prices have dropped so there is no way to refi the property without putting cash into the deal
> lending standards have gotten tougher – no more ‘fog a mirror’ loans with 0 down
> HELOs have been frozen
> jumbo loan rates are at least a full percentage point higher than non-jumbo rates right now IF you can find a lender willing to do a jumbo refi in CA right now
This combination of factors means no more housing ATM for many supposedly ‘well-heeled’ San Diegans
It also means that they are stuck in their current loan (almost certainly an ARM) and will have to deal with whatever reset terms they agreed to
As their properties are put on the market in distress sales we will see who has been swimming naked
