Ready for a short sale yet??

The subprime crisis is flowing through the system and
grabbing everyone's attention, but coming soon to a city
near you are all the other exotic mortgages, like Option
ARM (pick-a-pay), Alt-A, etc. These homebuyers may have had
better credit, but they had the same strategy: Get a low
interest rate upfront, and then deal with the reset down
the road, by either refinancing or selling the home. The
trouble is, now that many properties are worth less than
they were, that's neither easy nor very desireable, and
these mortgages are just starting to reset. Zacks analyst,
Dirk van Dijk, says: The number of these recasts is
relatively small right now -- at about $1 billion per
month -- but that number is set to grow dramatically over
the next few years, exceeding $8 billion per month in the
fall of 2011.

If the equity in your house is gone and your monthly mortgage
payment suddenly jumps from $2000 per month to over $3000
per month, what do you think is going to happen? How about
if one or both of the people in the household has been laid
off? Unlike sub-prime mortgages, these were for the most
part targeted at more upscale homeowners, meaning that the
next wave of foreclosures might be in gated communities,
instead of the 'wrong side of the tracks. The biggest writer
of these housing finance vehicles was Golden West, which
was bought by Wachovia, which was then absorbed into Wells
Fargo.

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