U.S. mortgage companies are headed for total collapse – here are the reasons why?
Jow Weinman
Feb. 10, 2007

The refinancing bubble has burst. As people just cannot pay their mortgage with home equity (prices) falling and short-term rates rising, the mortgage-banking sector is in total collapse. The mortgage default rates in February seem to be higher than January, which was a record any way. The backfiring of excessive risk taking (typical of the bubble, it has happened before in 1920s and mid eighties) is so severe that the mortgage banks will soon ask for Government bail out. Fannie May is also in trouble. Federal Reserve is scratching its head to find a way out of the real estate and mortgage banking mess.

The biggest part of the problem has not started even! The mortgage defaults will cause the banking sector to collapse and will drag the economy to its knees. All on a sudden people will realize it’s the song of deflation not just disinflation. At that stage the economy will get depressed and the real trouble will start as underemployment changes into outright unemployment. The defaults in mortgage payment will rise to levels far exceeding 1929-34. The mortgage banks will go belly up.

In the main street, there is a tremendous hatred and antipathy against mortgage brokers and bankers.

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