Posted by: arnegrim | September 10, 2010

Housing market set to cause recession… again

Why is the economy in for a double-dip recession?  The initial recession was caused by the sudden increase in ARM rates which homeowners couldn’t pay forcing foreclosures… but that was only the first wave (the subprime mortgages indicated below).  As the chart below shows, ARM rate resets will increase again (note the Option mortgages below)… forcing more homeowners out of their homes… which will be exacerbated by the high unemployment rate.  Be aware of the lag time between rate resets and foreclosures… you’re looking at a couple months to a year or so… which pushes the recovery out well into 2012.

http://www.responsiblelending.org/mortgage-lending/tools-resources/a-snapshot-of-the-subprime.html

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