Saturday, April 19, 2008

Again?!?

It looks like California is about to take another _huge_ hit...

It appears that people took out prime rate loans structured similarly to those crazy sub-prime ones we've heard so much about. That is, the borrower doesn't pay much for a few years up front, and then, after a specified time, their monthly payments will _double_
Combine that with a 26% drop in home prices over only the last 12 months...and you're looking at a bunch of people who's houses are worth 3/4 of the size of their loan...and who's paymants are now twice as expensive.

I can't imagine them not defaulting...on purpose...and buying someone's foreclosed house down the street at 3/4's the cost. Sure, their credit might be wrecked...but everyone else's will be too.

If this article is right...we're in for some seriously hard times...

Brace yourselves.

1 comment:

cdemaine said...

Dude, you gotta pay more attention - this has been clearly brewing in California for more than two years.

Combine this with the impending recession, high energy and food costs, general inflation, and a city, state, and federal tax nightmare, and it makes for quite a mess.