Originally Posted by
SkyHigh
It seems to me that the lowering interest rates should put the brakes on foreclosures a bit. Adjustable rate mortgages are tied to indexes that currently are diving to historical lows. As loans re-adjust it is possible that the payments could remain the same or be even lower. Hopefully this will be the bottom for the housing market and spur refinancing and home sales.
Smart home owners will use the reprisal from foreclosure to sell their home. The problem with the housing market is that there are too many home owners who can not afford the homes they are in. Somehow the system needs to be cleansed.
Skyhigh
The rates won't matter for many-they should have never gotten a loan. For others it is a problem because banks are now using a more realistic valuation and potential refis are under water at that point.
Here is a good article on WAMU and how their business model was based on very careless lending.
http://www.nytimes.com/2008/12/28/business/28wamu.html