This graph shows Monthly Mortgage reset rates for different types of adjustable rate mortgages. This graph is the reason why Banks have not been lending. This graph is the reason why the federal reserve activated the printing press in order to monetize the debt. Many people have heard about the sub prime mortgage crisis but another crisis of equal proportion could be near. Option adjustable mortgages are similar to sub prime mortgages in the fact that the borrower is paying low monthly payments because they are only paying for the interest on the mortgage without immediately paying for any of the principal. The resets are when the banks finally include payments of principal into the monthly loan payment. With higher payments and no down payment for something that is worth less, do we really believe that people are going to stay in their homes. In some cases people would have to be crazy to stay in their homes especially if they lived in Florida, Nevada, or California which have seen the largest decreases in house values. With up to 40 Billion dollars every month being lost in resets, and not all of the resets will file for foreclosure, but the option arms have a high foreclosure rate. So if you ask me if I think the stock market is going to be higher or lower in a year, this graph has my answer.
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