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News U.S. mortgage companies are headed
for total collapse – here are the reasons why? The refinancing bubble has burst. As people just
cannot pay their mortgage with home equity (prices) falling and
short-term rates rising, the mortgage-banking sector is in total
collapse. The mortgage default rates in February seem to be higher
than January, which was a record any way. The backfiring of excessive
risk taking (typical of the bubble, it has happened before in 1920s
and mid eighties) is so severe that the mortgage banks will soon
ask for Government bail out. Fannie May is also in trouble. Federal
Reserve is scratching its head to find a way out of the real estate
and mortgage banking mess. The biggest part of the problem has not started
even! The mortgage defaults will cause the banking sector to
collapse and will drag the economy to its knees. All on a sudden
people will realize it's the song of deflation not just disinflation.
At that stage the economy will get depressed and the real trouble
will start as underemployment changes into outright unemployment.
The defaults in mortgage payment will rise to levels far exceeding
1929-34. The mortgage banks will go belly up. In the main street, there is a tremendous hatred and opposition
against mortgage brokers and bankers. Now that's a kick!
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