Housing, an economic cornerstone

Mortgage Sector Shaking Economic Foundation

Realty Times -- It only takes one ARM adjustment to send some subprime household budgets into a tailspin. If a credit card payment is sucked into the vortex, not only does the household face foreclosure, but the credit card company reacts with a skyrocketing interest rate increase penalty, further exacerbating the household's financial woes.

There's now a much smaller sanctuary, if any, in a refinance,
because the borrower likely can't qualify, under stiffer credit standards today, for the same loan he or she received two or three years ago.

It's not just the low-income household suffering from lenders
pulling the red carpet out from under buyers, though that would be plenty. Mortgage companies failing, consolidating, laying off workers, and tightening purse strings stings the economy too.

Housing is, after all, an economic cornerstone creating jobs and revenues in sales, finance, insurance, building and rebuilding, as well as infusing local economies with tax revenues -- just for starters. Equity gains, when available, gives consumers more spending power, the power that fuels the
economy.

The sky isn't falling, but others say the economy has already been run over by high oil prices and now it's beginning to feel like, well, a house fell on it.

Conditions are chipping away at the cornerstone.

The article says it all.
Vern