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The Mortgage Meltdown: Is the Other Shoe About to Drop?

Having previously been blind to the bundled mortgage securities disaster (CDOs, CLOs, CMOs, etc.) but now having determined that most of the junk in those securities was "subprime", all the armchair pundits are now waking up and forecasting more disaster. However, just like they were a day late and a dollar short or the 1st go-round, they are no over-shooting in their forecast on the 2nd go-round.

The next debt wave of the debt debacle will be credt-card debt in that the 1st wave caught all the pipe-dream mortgage debtors (no $ down, too much ouse, variable rate, etc,) but this next wave will impact a level of debtors with somewhat more acumen. These debtors know that flaking on CC debt is much better than flaking on your mortgage - for the simple reason that you still need a place to live.

Suffice it to say that while "Alt-A" loans will still be trouble, if you look carefully, you'll see that most of those that flake are actually a poor credit risk and never were bona-fide "Alt-A" to begin with. And indeed, much of these people have flaked already.