Bad credit woes rocking mortgage markets

Well, it's not like we didn't see it coming...
As noted on Associated Press reports, published on Yahoo.com March 13, 2007:
Headline: "Late mortgage payments reach high"
Summary:
++Late mortgage payments hitting record levels.
++Consumers feeling pinch, can't keep up with rising adjustable loan payments.
++Delinquency and foreclosure rates were considerably higher for higher-risk subprime borrowers, especially those with adjustable-rate mortgages.
++Nearly 5% of the 43.5 million loans that the Mortgage Bankers Association tracks could be headed for default.
++Wall Street investors' worried about troubles facing "subprime" lenders who make loans to people with poor credit rattle markets, send Dow Industrials plummeting.
++Fearing out-of-control defaults on high-risk mortgages, federal bank regulators were reported earlier this month to be twisting lenders' arms to use caution in making subprime loans and strictly evaluate borrowers' ability to repay them.
++Experts wring hands: "Unfortunately, it appears delinquency rates will likely worsen before they improve," said Gina Martin, economist at Wachovia Corp. Economics Group.
We've been predicting a shakeout in the housing market and the booming mortgage industry for some time now, and the high-risk loans made over the past several years are now proving to be unsustainable.
For readers of this column, they knew that adjustable and interest-only loans were not in their best interests over the long term.
Yes, for short-term financing, those loans did seem quite attractive. For a time. When rates were low and prices were going up.
Problem is, lenders put the wrong people into these loan programs, namely, people who had lousy credit. The folly of banking on people with poor credit to drive the economy always seemed slightly insane to us.
So what's next? It's going to be painful to watch this meltdown. People will get hurt. They will lose homes and banks will lose money.
But we doubt the scoundrels who foisted these loans onto the financial landscape will lose much or suffer. Most will probably manage to dodge penalties or justifiably appropriate prison time.
They will simply move on to their next scam... remember the S&L crisis in the first President Bush presidency? History may be repeating itself here. Stay tuned...