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More Foreclosure problems to come

A report on what happened, and what is likely to happen. Amazingly, it appears like my analysis was spot on. From the report:

What Happened?
For the Second Half of the 20thCentury, Housing Was a Stable Investment…And Then Housing Prices Exploded
Prices Exploded Because the Borrowing Power of a Typical Home Purchaser More Than Tripled from 2000-2006
Americans Have Borrowed Heavily Against Their Homes Such That the Percentage of Equity Has Fallen Below 50% for the First Time
Housing Became Unaffordable in Many Areas Using a Typical 30-Year Fixed-Rate Mortgage, Which Led Many Borrowers to Take Exotic Mortgages
There Was a Dramatic Decline in Mortgage Lending Standards from 2001 through 2006

Why Did It Happen?
Among the Many Causes of The Great Housing Bubble, Two Stand Out:
       1) The lenders making crazy loans didn’t care if the homeowner ended up defaulting
       2) The entire system –real estate agents, appraisers, mortgage lenders, banks, Wall St. firms and rating agencies –became corrupted by the vast amounts of quick money to be made
The Enormous Amounts of Money to Be Made Corrupted Our Financial System
Deregulation of the Financial Sector Led to a Surge of Compensation, Leverage and Profits
Wall Street Firms Were Making a Fortune Securitizing Loans
Mortgages Were Pooled into RMBSs, Tranches of Which Were Pooled into CDOs
The Rating Agencies Were Making a Fortune Rating Structured Finance Products

What is coming?
 The wave of resets of subprime mortgages is mostly behind us, but the mortgage crisis is shifting from defaults driven by resets, to one driven by underwater mortgages and job losses.
Fannie and Freddie prime mortgage defaults are 8 times higher in Q4 2009 than they were in Q3 2008.
Two Waves of Losses Are Behind Us… But Three Are Looming…

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