Here Comes Another Bump In The Road

This chart from Credit Suisse via the IMF shows the heavy subprime resets in 2008, plus it shows the reset problems with Alt-A and Option ARM loans in later years.

Although many of the homeowners in the 2009 to 2011 reset periods will refinance (if they can), this shows that the problems in housing will linger for several years. What is especially concerning is all these Option ARM resets in 2010 and 2011. Most of these homeowners are selecting the minimum payments (negatively amortizing) and many homeowners will be upside down when the ARM resets.

Hopefully, our Northern California area will not be hit as hard as other areas of the country. But, we won't know. We need to face this challenge "head on". Talk with your clients. The professional real estate industry - in some instances tacitly, in others actively - participated in getting us into this situation. But it can lead us out of the mess we're in.

It's the right thing to do.