Summary
The subprime pipeline has a ways to go. Very much like a virus infects humans- it must run it's course. In 2002 the rebirth of the subprime mortgage began to prevent our economy from dipping into recession. In 2007, the market shows the first short sales and foreclosures. The 125% rule of negative amortizing loans continues to trigger as housing prices slide, leaving more inventory on the market ahead of schedule. Will it take five years from 2007 to exhaust the build up of Neg Am loans? What about the less dramatic Interest Only loan?
Analysis
A quick fix- my opinion is we tried the quick fix in 2002 by lowering interest rates, the market needs to run it's course and find it's own stability.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
