Thursday, July 06, 2006

Nat's Prediction
If Ken Heebner is only partially right, a big part of the price decline is going to be caused by all the crazy mortgages that allowed people to buy more house than they could afford. As these mortgages reset in a market that is not appreciating and may even be depreciating people will realize they have little to no equity. People are going to find out the hard way what that term in the fine print "negative amortization" actually means. What's the incentive to keep paying an increasing debt payment on a property with no equity (and with a negative amortizing loan the principal amount growing)?

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