What is it? Is there a mortgage crisis or a general slow down?

I think we are teetering on the edge of some serious home financial issues not only in Colorado Springs but the entire United States. I visited Google this morning and typed in “Mortgage Crisis” and found over 14 million matches. There must be something going on. I spoke with a stock broker yesterday and he said Countrywide Mortgage looks like they are steering clear of bankruptcy. Last week, American Home Mortgage defaulted and did not fund many of their new loans.

So what do we do? From what I am reading and seeing in the market, people are defaulting on ARM loans (adjustable). Banks are forcing the customers into foreclosure and subsequently the banks are struggling with default themselves. I would think the banks need to readjust the returns they want to make and then adjust the mortgage they have out. If they did that, the foreclosures would drop, inventory would drop and then confidence and the economy would return.

I’m probably too simplistic, but it works for regular investors when we have to lower rents. Some money is better than no money. It’s simple supply and demand. Too many foreclosures equal big losses for banks too. They need to grasp this principle of some money is better than no money.

Thanks, Brian
www.maecker.com