American dream becomes nightmare as millions face foreclosure

I can only state again that the same sort of loan-toxicity has affected the Alt-A and Prime mortgage markets. Too many lenders loaned money to people with too much of a focus on FICO, not on the entire loan picture (silly things like down payment, provable income, work and housing histories, etc.). These loans were made in much larger numbers and much larger values simply because the average American twit believed that low interest rates were the ONLY factor in their own loan calculus.

ARMs are resetting across America as we speak. Using the $250K national median price for a home, and knowing at least $1 trillion will adjust in 2007, then we cannot escape the conclusion that 4 million homedebtors are going to have to either endure increased monthly mortgage payments, or re-fi to avoid them. YET, refis not only incur some capital cost, but they become progressively impossible once home prices fall (as they've been doing since the 2006 "spring buying season" was a bust). There are only about 110 million households in the US. 4% of those will have to deal with some serious economic consequences this year. 2008 is likely to have the same number of DIFFERENT homedebtors. 2006 had about 2 million (using the yearly $500 billion in resetting ARMs as a base). 2009 will probably have a drop, but some reports I've read claim there must be a spike in 2010 and 2011 (due to analysis of loan terms, which usually span 2-7 years before the reset hits).

In total, from 2006 to 2011, I'd imagine that about 10-15 million American households will have to deal with serious financial adjustment when their ARMs reset. That's a clean 10% of America's households.

And if "Helicopter" Ben Bernanke tries to lower rates, he'll just release the immense pressure of the LenderLice