I think by now we're all pretty clear on why and how the subprime and Alt-A (liar's loan) house of cards is collapsing.
But I think you should all game this out farther down the road - all the way to seemingly safe 30-year fixed good credit loans, and the fate of the American consumer-driven economy.
Because Americans stupidly extracted their paper profits, their fake equity, and went on a spending binge the likes we've never seen. And now that fake equity is disappearing.
So many Americans will owe way more than their home is worth, many Americans with ARMs won't be able to make the higher payments, millions of Americans will lose their jobs as housing-ATM consumer driven spending dries up (especially the auto industry), and millions will now lose their homes.
Just game it out. And get ready.
The state of the home mortgage industry is one of the hottest news stories these days. And frankly, it's scaring me.
I'm worried that many folks are headed for financial trouble because they've taken on mortgages that are too large; and I'm scared that others have finally realized it wasn't a good idea to pull out all their home equity.
According to Synergistics Research, 24 percent of homeowners took out a line of home equity credit to buy a car or truck. And 8 percent purchased a vehicle with a second mortgage.
In Sunday's column, "Loan Loser: Home-Financing A Car," I challenged people to stop and do the math before using the borrowed money from their home to purchase a depreciating asset. Too many people just assume that a home equity loan is cheaper than a traditional car loan.