As I have been saying on my radio show for the past almost year, we are in for another mortgage crisis as the problem now hits the sector that is not sub-prime. Read this excellent article on the mortgage crisis that is looming for 2010.
People seem to think that this is just an isolated crisis that is the result of bad lending practices to consumers who should not have been granted the loans that they were given but it is not. Although it very well could be the root of the problem, the crisis caused so much damage in home values that everyone has been affected and those with sterling credit, provable income and assets are about to be hit with mortgage resets on properties that are worth a lot less than they owe. Many will choose to walk away while many others will attempt a loan modification and we all know where that is headed.
The fact is, we are in this for a few more years to come especially given the fact that many lenders are giving 2-5 year loan modifications on homes that are worth half of what they owe. So what will happen, will the homes be worth double in 2-5 years when their loan modification expires? Uuuuuuh, no. We will be right back to where we are today. This is just common sense. Who in their right mind really thinks that their home will double in 2-5 years? Seems to me that lenders are just wanting to collect "rent" for the next 2-5 years while they decide what to do.
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