More People Without McMansions

I've stayed away from the mortgage market stories because I really thought the financial impact was overstated. Responsible, hard-working adults don't go bankrupt on their mortgage. But apparently a whole lot of people earning crap were given keys to $300K homes and there's a bigger fallout than I had anticipated. While I still believe that the overall effect is overtsted, it is not the small story I had once thought it to be.

The percentage of U.S. mortgages entering foreclosure is the highest in more than 50 years, the Mortgage Bankers Association reported on Friday.
The biggest jumps came in bubble states like California, Florida, Nevada and Arizona. But mortgage defaults were also high in states hit with the loss of manufacturing jobs -- Ohio, Michigan and Indiana.
“It is tempting to call the bottom,” wrote in Chris Mayer. “But the nature of bubbles is that they reach ridiculously absurd heights that few thought possible. Then when the bubble deflates, things usually reach an absurd low that few thought possible. They also tend to take some time to unwind. It would be an odd historical anomaly to have a five- or six-year housing bull market and then have the thing unwind in a one-year bear market.
“This is going to take some time to play out. At least a few years, I’d say. Therefore, as a generalization, don’t be tempted by housing stocks or mortgage lenders just yet.”