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How concerned are you that the mortgage industry mess will affect the rest of the economy?

For sale signs line the street in a complex of new homes in Beaverton, Ore., Wednesday, Feb. 28, 2007.  New-home sales plunged in January by the largest amount in 13 years. (AP Photo/Don Ryan)
Don Ryan
For sale signs line the street in a complex of new homes in Beaverton, Ore., Wednesday, Feb. 28, 2007. New-home sales plunged in January by the largest amount in 13 years. (AP Photo/Don Ryan)

"First off there is no mortgage crisis. Most of the crisis is media hype. Industry statistics show that the average delinquency rates in the subprime sector average between 10 and 15% for the last 10 years. Delinquency meaning anything from just past the grace period to on the brink of forcloser. This rate currentlly stands at 13% ... hmmm, let me see ... somewhere between 10 and 15%. Now with some area drops in house values cause more of this 13% to let the house be forclosed? Maybe. But most lenders keep a higher reserve % on the portion of subprime loans they have out than more conventional and prime mortgages. If news organizations, especially business news organizations just quit feeding the fire it would go away in a couple of weeks." --Chuck, Missouri

It is my feeling that there is still a lot of concern about the whole housing market that has not been brought to light. The whole housing market could be in for a larger retraction than is being discussed. We have not seen the bottom.” -- Gerald V., Colorado

I think that when that mortgage snowball starts rolling, we will be run over.” -- Bruce D. Florida

“I think that it will affect the economy somewhat but will not send us into a recession. It is government involvement to any degree that scares the hell out of me. The government should stick to slandering one another and not touch our financial systems. They allow lenders to loan money without documentation and now they want to help - give me a break.” -- Al D., New York

"I believe that we are already in a recession and that 2007 will be a disastrous year for our economy. The sub-prime issues that are so widely discussed now are but the tip of the ice-berg. Adjustable Rate Mortgages, whether prime, Alt-A or sub-prime are the issue. The upward adjustment of the rate forces higher monthly payments. Whether the borrower has a high credit score or not, the pain of such adjustments is severe. Coupled with substantial job losses from all real estate related industries as well as a generally slowing economy causing non-real estate industries to lay off workers, the higher monthly payments will force many to lose their homes, high credit scores not-withstanding. The consumption boom that has driven our GDP growth has been heavily dependant upon real estate funding. The home as an ATM is rapidly becoming history as home prices fall. They have fallen slowly and minimally so far but a tipping point approaches...and soon. Signs of that are already appearing as one watches the retailers. More dark store fronts, falling stock prices and worse lie ahead. Before another year passes, we will be in another Great Depression, likely more severe than the one in the 1930s.” -- Don S.., Massachusetts

“No concern at all, some sectors are always making bad decisions; As usual there are buyers in the wings just waiting to pounce on hammered sectors. I expect the same for the mortgage debacle.” -- Bill R. New Jersey

I have been telling everybody who will listen for the last three years that this was going to end badly and could lead to a worldwide economic calamity. It's playing out exactly as I thought. Housing prices have stopped rising and are now falling. Speculators want out, forcing up inventory by huge amounts. Builders are stuck with houses they can't sell. Anybody who could fog a mirror got a mortgage, and now millions face foreclosure, pushing inventory up even more. Buyers have all but disappeared--those who can only fog a mirror can't get loans anymore, those with good credit are standing on the sidelines waiting for prices to drop further.” -- Jeff D. Florida

“The mortgage mess implies home prices no longer will increase which implies home owners will be less inclined to invest in home improvements which implies less work for construction workers which implies less money for their families to spend which implies a slowing of the economy.” -- Anthony C., New Jersey

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"It's just another hiccup. People who used their houses as atm machines will see how money will just dissapear, when the house values come down. Just like tech in 2000, the money just disappears. Thats why its called money management. This will happen again and again and again. " -- George K., Arizona

"I believe the mortgage issue is of great concern to the United States economy. Furthermore, I feel part of the double-edged dagger will come from subprime mortgage defaults, the other when more of the interest only teaser rates start to mature.

First of all, loans were sold and are still being sold with the advertisement "Why rent? When you can own for the same cost of renting?" Kind of funny that I actually heard an advertisement like this on the radio while driving my car earlier today. Then, when the purchaser calls to find out that he or she can purchase a home at $150 less than what his or her rent is for up to 5 years, until the ARM, Interest Only or whatever alternative mortgage system that was invented matures. All the shopper hears and starts to feel is that he or she will be able to start living the american dream of purchasing a home. Moreover, people are purchasing mortgages when rates are still at an all time low, but they still need a teaser rate to afford their new home?

Secondly, why would you be willing to sell a loan to an individual, whose debt to income ratio cannot be verified?

Currently, the mortgage issuers are belt tightening their systems of underwriting, which is of great importance, the public also needs to be aware that the real estate market has cycles, always has and always will. Right now is the down cycle and in the past the down cycles have been longer than the upswings. The only thing that maybe of great blessing to the economy in the midst of the mortgage debacle is that inflation is in check, the interest rates are still at an all time low and the economy is semi-robust." -- Tek C., Georgia

"Equity in housing is so interrelated to the rest of economy as homeowners have been tapping their home equity to supplement income, buy durable goods as well as obtain down payments for second homes and investment properties. Home equity has been used to buy vacations and invest in the stock market. I think it's time to get back to basics and traditional lending practices." -- Bob M., New York

"Very. There are some factors that people do not understand and I don’t think has the true effect on the economy. With the price appreciation we had in real estate in 2004 and 2005, so the economy heated up. More cash liquidity from refinances, equity lines, and sales meant there was a steady stream of cash available as needed. Now that we are decelerating, that equity is gone, so people who needed the cash to manage and survive before, no longer can. Short sales, foreclosures, and mortgage rates will only increase as a subsequence. The long term effect of this will put a dent in our economy. But consumers are resilient so this will not cripple us. However I would bet $10,000 that mortgage rates will fall to 5% on the 30 year fixed." -- Sonny A., Modesto, CA

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"Most Americans are living from pay day to pay day. While I don't think the mortgage rate issue will be felt near term, they will be a threat to housing costs going to the down side in 6 months or so." -- James G., Prescott, AZ

"I think the fallout will be much more severe than what everyone thinks. You see one cockroach and it is just a small sampling of the true problem that lies beneath the surface." -- Ken M., St. Louis, MO

"It's always been concerning that people were clearly beyond their means, primarily on home equity. 'Tis now time to 'pay the piper.' Hell yes, it'll affect the rest of the economy!" -- Neil W., California

"How can anyone be concerned? The weak lenders made bad loans and will suffer. The big boys will buy them out and pass the costs on to the rest of us just like the credit card companies. I blame Greenspan et al for relaxing the lending requirements just as he failed to tighten margin requirements in the late 90's." -- Jerry S.

"I believe everybody should be concerned about the housing market considering most people make their biggest investment in their homes. Till now housing used to be one of the safest investment people can make, and now it seems people are losing their safe investment, that means poverty will flourish and we can see that by looking at the crime rate in some states. Example: The state of Ohio where crooks are braking into homes and stealing the copper piping or other crimes. Their target being empty homes which the city of Cleveland in particular seems to have an abundance of them due to 'people losing their so called safe investment.' I think something needs to be done about the mortgage industry to save the economy from the biggest recession we have seen in years." -- Razvan M., Brunswick, Ohio