Here we go again. Housing Bubble, Part II

Rumors are flying, although I haven't seen much on the net (yet). Apparently, there is going to be ANOTHER housing crash. I'm really not sure why few have picked up on this one yet - ok, ok, the extent of my looking for info was a Digg search. If it is not on Digg, no one knows about it.

There is another questionable mortgage product, like the ARM's that caused the first bubble crash, that is coming due for adjustment in January. I actually do not even know what this product is because the person who told me didn't want to explain it all, (He works for one of the financial institutions that is to blame for much of this, and he feels a certain sense of shame.) but it sounds like maybe the first round of inadvisable 5/1 ARM's are ready to adjust for the first time. The timing makes sense. It was about 5 years ago that the ridiculous run on real estate started, and I know that the 5/1 - the rate is locked for the first 5 years and adjusts annually after that - always looked more attractive to me then the 2/1 or straight ARM. The idea, of course, is that a 5 year fixed period gives one plenty of time to refinance into a 15 or 30 year fixed mortgage. The problem - hindsight being 20/20 - is when the mortgage market tanks and you can't refinance, or you can't afford the fixed rate because you have no job, or you are upside down on the 5/1 so no one will finance enough to cover the balance, you are screwed.

Well, the first round of people who landed in that crappy boat are now facing the adjustment of their rate. And they are still upside down and unemployed. Here we go again.

What's another trillion between bankers. And republicans. Thanks GOP, we really love getting raped by you guys.