Subprime Mortgage Crisis Far From Over
The subprime mortgage crisis is still in the early stages of eruption, says money guru John Hussman, the manager of the $3.18 billion Hussman Strategic Growth Fund. Many more foreclosures are just around the bend as the majority of subprime rates are about to reset. It will be a huge surge as only about a quarter of the total resets scheduled to occur. “That places us near the start of the third inning, where we can expect each of the ‘nine innings’ to be about three months in duration,” says Hussman.
“We’re hearing a cavalcade of talking heads telling us the housing market could right itself later this year,” says Robert Sheridan, a housing developer with Robert Sheridan & Partners. “Let me be clear. It won’t. Some markets may not recover until 2010, and, in cases like Florida, a turnaround could take as long as three to five years. There is lots of grim news to come.”
Homeowners holding high interest subprime loans are trying to hang on by taking second and third jobs, just to keep up with payments. But not to far down the road, borrowers will have to give up because of sheer exhaustion.
In the meantime, Barney Frank’s bill is close to approval and will be sent to the House next week. Republicans scoff at his bill saying that it saves unworthy people who overextended themselves buying into affordable mortgages that have turned, and continue to turn, into outrageous payments.
A main part of the legislation provides up to $300 billion worth of home loans when properties sunken in value since the mortgage was first written. President Bush threatens to veto the bill because he feels it’s unfair to taxpayers to bail out borrowers who shouldn’t have gotten the loans in the first place.
Like this article? Share it...
