Q for those predicting housing collapse......in the subprime, Alt-A, ARM's interest rate doomsday articles everyone posts.....they all assume mortgage companies WANT to forclose. They all assume that mortgage companies want to take back your property so they can "flip" it and make even more money! Dream on in the current real estate market. A mortgage company DOES NOT want to be stuck with your house or, worse yet, have to sell it for a loss.
Hmmm....unemployment is at a 5 1/2 year low.....real estate market is weak in general....maybe it would be better for the mortgage company to start working more with these home owners to get them into fixed loans so they can continue paying for their over-priced property for 30 years. But that doesn't make for sexy, "scary" articles.
"Yeah, but that's not how they do it". I read an article (couldn't find it again to link to it) where it said 3/4 of all forclosures could be prevented. The writer of the article predicted that mortage companies will become very agressive in the near future at getting people into fixed loans. Switching someone from 4% to 8% (in a ARM that is converting) so you can later forclose on them does not make sense when the mortgage company later takes a monster loss on unloading the forclosed on property. Especially when the mortgage company is looking at buying back non-performing loans---and the possibility that they end up going out of business because of it.
As for the "World is coming to an end" take a look at the Chinese Stock Market. It is now 3331 (vs 3040 on Feb 26th and 2771 on Feb 27th after the big 9% drop). Now the market needs to drop 17% to get back to it's 2771 "world is coming to an end" level. Yes, the Chinese market is not the U.S. market. But it sure was important to people the day it crashed. Now that it has rebounded it isn't though....hmmmm.
I'm cautious on the overall market, but I'm a long way from hiding my money in Easter eggs around the yard.
Dave
