It's understandable why Mr. 90% wants to avoid talking about any substance. What is he going to talk about? His voting record with Bush? His support for Phil Gramm, who ushered in this economy through years of hard work in the Senate on behalf of fancy banks and Wall Street gamblers? The GOP has been hoping that the economic decline has ended but there is nothing that suggests it's over. The 345 point fall in the Dow yesterday is perhaps the start of the second drop, the hard fall that many have been predicting since last spring.
For those in the Republican party who thought that ignoring the housing crisis would someone be a winning strategy, they may want to look at the next wave of failures coming. As unemployment moves up, housing headaches will only get worse.
However, even without reset difficulties, subprime and Alt-A loans are slipping into default at very high rates. The concern about future resets has given way to concern about borrowers equity erosion."
However, the Option ARMs and Interest Only (IOs) loans scheduled to reset in the next few years will add more trouble. These loans represent about 15% of securitized loans and some have negatively amortized, increasing the payments and making refinancing more difficult. According to data from Barclay's, about $300 billion in option ARMs and $820 billion in IO's are set to recast. The results could be payment shocks over 80% for option ARMs and over 60% for IOs according to Barclay's.
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