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...and this action will barely be remembered 3 months from now. A tiny fraction of ARM loans resets and we have a panic requiring the fed to ride to the rescue, but there are 3 years more of resets already in the pipeline.
People are defaulting on mortgages because they can't refi or sell. The banks collectively stopped extending the risky mortgages, so now they can't sell their forclosed properties at anywhere near where they were collatoralized because nobody can afford them. It's the exact opposite if the feedback loop that drove prices insanely high to begin with.
This one is going to be a doozy...a recession lasting a minimum of 3 years, unless homeowners have the wit to stop making payments before their ARM loans even reset.
