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This guest-post is by Jeff Miller. He is an Economist by training, a tech geek by inclination, and an IT Manager and a Real Estate Investor by experience. Jeff also knows a number of people who are smarter and better connected than he is and he hopes to share what he has learnt with you in a series of articles that will complement his somewhat lengthy comment to my post Black Money Saves Our Financial Sector.

As I mentioned in US Housing Market Crisis caused by Mortgage Backed Securities, the recasting of the minimum payment loans caused a lot of what we are seeing. Looking back on those loans will give us a clue as to what is going to happen in the housing market.

The minimum payment loans started being mass marketed in 2004. At that time, many of those loans were set to recast after a set interval. There were two intervals, 3 year and 5 year. The 3 year recasts hit in 2007. The 5 year recasts will hit in 2009. So, we know what will be coming in 2009. I don’t think that 2009 will hit us as bad as 2007. For one thing, the institutions will already be geared up to handle the loans (loss mitigation departments, REO departments, etc.). Also, the public will be use to it and is less likely to panic (unless the new media succeeds in its “the sky is falling” reporting). [Read more]

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It feels great when your blog post is a source of inspiration for others to start a new blog. And that’s precisely what happened with this post Black Money Saves Our Financial Sector. [Read more]

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