The foreclosures on the market now are from loans that began to go bad over a year ago. This is largely before the recession began. Now, think logically about the current financial situation of layoffs at Intel, Boeing, Starbucks, Macy's, Wal-Mart etc. The unemployment rate has almost doubled nationally in a year. These are not just folks making your morning drip or checking you out at Macy's. These were the $50k+ variety that drive the housing market. As of Dec 08, 9% of jumbo loans were at least 60 days late. I think this number can only go up over the next two years. The resets will start in full force this year and next. This is the latest chart from Credit Suisse:
If this all makes you sick to your stomach, I highly recommend a pint of:
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