Monday, October 20, 2008
It could be long into 2010 before we know the true value of our banking system’s housing portfolio.
Let’s summarize the “challenges” ahead …. * Home loans. Additional Option ARMs and Interest Only loans are scheduled to reset through 2012. Almost a trillion dollars of debt to roll over, and most of the original loans are “under water”. Many home owners will chose to walk. It could be long into 2010 before we know the true value of our banking system’s housing portfolio. * Housing. In some areas, it will take several years for the market to recover. Start with excess inventory, factor in higher unemployment, and we have a recipe for sluggish sales. Economists appear to be unsure how to measure the impact of the mortgage crisis, the rash of financial institution failures, or the sudden decline of available credit. No one seems to know how to include these three “challenges”