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Fred CNow, about all those irresponsible people that made irresponsible choices... Many of those people had no idea how to handle finances. Those people were desperate beyond any measure. They wanted to have the American dream, a house. This didn't happen over night. The housing market started to escalate and people saw NO end in sight to the rising prices. The lax regulation on loans only invited the ignorant to join the party and achieve the American dream of home ownership before they were completely priced out of the market. DESPERATION - can you say that - DESPERATION. I've been watching a lot of these families move out of the houses - foreclosed upon. A lot of these people had no idea what it meant to take on a mortgage. No, they had no real means to pay but they didn't care, they wanted in before it was too late.
Now, bring on the Bear Stearns and other financial institutions - they bought a lot of those financial mortgage instruments. Those half million dollar homes are now selling in the $350K range. That's $150K of loss. Now multiply that many times. Who do you think eats that loss? It just doesn't disappear. Nobody takes a Mulligan on it. It evaporates and somebody needs to pay the piper for it. If you live in one of those areas where the housing market went exponential you should talk to a real estate broker. The toughest thing for them to do (these days) is find buyers that actually QUALIFY for a loan. This is one of those RIPPLE DOWN type of affects that we will watch happen. Somehow I just don't see this one getting swept under the rug without a few repercussions.