The image above shows what Jim would call "max-pain" in the on going storm of mortgage resets. We are now in the midst of a mind numbing peak in resets of subprime mortgages. Gee, could this be why retail sales and consumer confidence have fallen off cliff? And while we're at this grim peak, remember that reset doesn't equate with instant default. Default takes 90 days to happen and then once foreclosure proceedings are started, depending on the state, it can take up to a year before the foreclosure actually happens. So even with a peak in resets now, banks and the courts will be busy for the next year dealing with whatever carnage results from this reset tsunami.Oh, and before you breathe a sigh of relief that we're at a peak in resets of "subprime" mortgages, notice that another tsunami of option arm adjustables and Alt-A resets will get underway in 2009 and not peak until 2011. Going from interest only to a principle and interest payment will be a killer.
-MMK for the Buttonwood Speculator
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