Sunday, December 14, 2008

The second wave of mortgage meltdown will soon hit; it will add more misery than subprime loans

CBS's 60 Minutes reports tonight some shocking news: a second wave of mortgage meltdowns will hit next year and peak in 2010 -- throwing many more families out of their homes.

The result will be the kind of near Depression more economists are increasingly predicting and a Dow of 4000 to 5000.

60 Minutes called these loan instruments Option Adjustable Rate Mortgages and ALTAES(my guess on the spelling). These mortgages offer teaser, low loan rates of 3 to 5 percent, then reset after two to three years at a higher rate. People are even defaulting on the teaser rates. And of course, these loans were bundled and sold as securities on Wall Street.

This next wave of defaults is going to devastate the economy. And people's lives. This is going to be an incredible tragedy.

It will take three, four to five years for 8 million American families to lose their homes. And the commercial real estate markets and credit card debt problem will hit next.

It is a time bomb effect. One in 10 Americans is behind on their mortgages, the highest rate since such numbers were first kept in 1979, 60 Minutes reported.

Sobering and devastating news and projections. Greed hurts so many. If you missed the 60 Minutes report, be glad. Although I am not at risk financially, it still made me feel sick for the fates of so many Americans and their children.

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