We Will Have No 2nd Wave Of Home Foresclosures

That is because the 1st Wave hasn't subsided yet. Cant have 2ND Wave if 1st Wave is still rolling.



If you notice that the 90 day Delinquency Rate is still going up.

The foreclosure rate and REO rates have been impacted by government tinkering in the market. Federal and state efforts have mostly delayed foreclosures, preventing few. The same is true for loan modifications which fail about half the time. Just delaying the inevitable till Wall Street Bonus's are paid out.

So eventually the first wave will slightly recede which will tack on another 1000 points on the DOW. But what about all of these loan mods that will go bad once again in late 2010-2011? I am thinking the 2ND, 3rd, 4Th Waves could be bigger and more catastrophic to the economy. I am basing this on many low introductory payments/ARM loans are due to reset very soon, then again we don't have to wait till they reset as option ARM mortgages are already in 1st gear of default.



From the above chart, you can see that resets are increasing from here with peaks in 2010 and 2011/2012 in the range of $30 to $45 billion monthly. The chart also shows sub prime resets are still going on, but decreasing in frequency over the rest of 2009., Why? Because these are the ones being loan modified or already filtered through foreclosures. However, prime resets and resets on loans to people with decent credit scores but special circumstances (stated income) are heading straight up through early 2012.

This has nothing to do with good credit ratings and or employment. These payments are set to explode higher.

Geithner and Bernanke have pulled a rabbit out of their hats for the very short term, just in time for Wall Street bonus season. They have saved their jobs and they did avert a depression.

But they have laid the groundwork for the inevitable final death spiral that will occur sometime in late 2011-2012.