- Chicago Newstips by Community Media Workshop - http://www.newstips.org -

Titanic

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Getting a new president at this moment in time is like “choosing a new skipper for the Titanic after it’s already hit an iceberg,” a mortgage industry observer tells the Washington Independent [2].

The subprime mortgage mess is only about three-fourths of the way through, with 2.2 million subprime foreclosures predicted next year.

On top of that, Alt-A loans will reach their peak default year in 2009 (a $1 trillion market, compared to $885 billion in subprime loans).

And that’s not all — next year payment-option adjustable rate mortgages will begin their resets (when borrowers no longer choose their monthly payments, and start paying on principle), and those mortgages will continue resetting for the next three years — “the duration of the president’s first term.”

That leaves prime borrowers, and rising unemployment is certain to push more of them into foreclosure.

 It makes the case for broad-scale government action on the foreclosure crisis — such as NTIC [3]‘s Gail Parson sketches out in the latest Newstip [4] — pretty compelling.