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  • From: Clansgian AT wmconnect.com
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Fannie/Freddie bailout question
  • Date: Sat, 13 Sep 2008 20:17:24 EDT



> >This presupposes that most jobs will disappear and people can't pay
> their house payments. Do you think most businesses will fail?

No. That's an old pre-burst NAR and Greenspan line.

A very large number of the mortgages were taken on with this assumption:

You get a low teaser initial ARM (or worse) rate for two or three years.
But, what? You worry? (Alfred E. Lereah). Houses are appreciating at around
20%
per year and we all know that's going to go on forever, after all, they ain't
making any more land! So in three years when your ARM adjusts and your
payment would go beyond what you could pay, just refinance based on the
increased
equity! Get another ARM and in three more years do the same thing.

But housing "values" didn't continue to rise, in fact they've fallen
precipitously. Now several million home-debtors (home owner would be a
misnomer)
still have the income they've always had, the ARMs are adjusting, and no
refinancing is avalable.

So in the present debacle, it isn't necessary for jobs to disappear for vast
numbers of mortgages to be foreclosed. </HTML>




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