The Washington Post still does not have a clue about the housing bubble. It continues to focus on the resetting of adjustable rate mortgages as the basis of the foreclosure crisis.
This is wrong. The basis of the foreclosure crisis is that people purchased over-valued homes at bubble-inflated prices. On average, nominal house prices are down almost 20 percent from their bubble peaks. In many areas they are down by 30 percent. In other words, people owe $300,000 on homes that are now worth $200,000.
If house prices had not declined, then the resets would not be an issue. Homeowners could get new mortgages. Furthermore, if the mortgage payments did pose a problem, they would be able to borrow against their equity or simply sell their home and put money in their pocket.
The housing bubble and its subsequent collapse is not a secret. The Post reporters who cover housing should know about it.
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