Now if you watched the video, you'll get a sense of doomsday. Others that I've talked to about the next wave of mortgage defaults and foreclosures say the government will solve the "problem" by mandating massive loan modifications and just buying more banks. Let's take a look at some information first before we say the government can solve the problem.
If you look closely, you'll see that the subprime mortgage crisis is "behind us", although we're still feeling the pinch from this because many of those borrowers have their homes on the market as a short sale or have already foreclosed. However, looking forward, you'll notice a gigantic increase beginning halfway through 2009 and through 2011, that Option ARM loans and Alt A loans will see their resets begin to occur. This means those homes (many are already behind on their mortgages) will see an increase of their mortgage payments (that they can't afford now).The amount of these loans that were written are astounding as well. Option ARM's make up nearly 18% of every mortgage in America (that's nearly 2 out of every 10 household). If that doesn't make you scratch your head and say, "Hmm", you're either brain dead, simply really don't understand (call me), or you don't care. And to get to the point of the title of this article, while I don't have statistical data as of yet, it's a very well-known fact that "a ton" of these types of loans were written here on Long Island. That's where a lot of people, made a lot of money.
When you think about 50% of these loans being unable to be paid, that's alot of loans in default. And to touch on the point about the government "saving the 'victimized' people from losing their homes", who's to say that after the government "saves" them, that they'll continue to pay the mortgage or maybe people who are paying their mortgage will scratch their head and say, "Why am I paying my mortgage...
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