said by dogma :

said by USA TODAY :

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WASHINGTON (AP) — Mortgage finance company Freddie Mac (FRE) will no longer buy subprime mortgages that have a "high likelihood" of payment shock and foreclosure, a surprise move that came amid a deteriorating market for subprime loans affected by slumping home prices and rising interest rates, the company announced Tuesday.

The median price of an existing home sold in January dropped to $210,600, a decline of 3.1% from a year ago. It marked the sixth straight month that the median price has been down compared with a year ago. The January decline was the third-biggest drop in history.

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The end of subprime lending is at hand, coupled with the third biggest drop in home prices for the Month of January in HISTORY.

Since "subprime" (under a 660 FICO I think) has been the market, the driving component that has pushed home values past reality over the past 10 years. And considering 70% or so of potential home buyers fall into the subprime category, this move effectively locks them out of the market. Add the increasing mortgage default rates rose 67% and bankruptcies rose 9.6% during Q4 2006. (BTW, BK's are pretty much irrelevant nowadays due to the BK laws being rewritten by the "BigLending" cartels)

In a Filing footnote, I find: Freddie Mac renegotiates the terms of the loan with someone who is delinquent, then, voila, that person is no longer delinquent. It seems to me that since about June of 2006, Freddie Mac is struggling to keep this Ponzi scheme afloat...at least until today. So we may see foreclosures quadruple month over month by years end.

It is pretty clear we are looking at a 40% value drop in home value over the next 2-4 years, IMO. And moreover, as was mentioned yesterday by Alan Greenspan, a major economic recession is headed our way by years end...which may have helped precipitate the massive DOW/S&P 500 sell off today.

What do you think?