Hi Plantic and Co,For the record, I am aiming for a retracement...

Hi Plantic and Co,

For the record, I am aiming for a retracement here for the next several weeks and then another stage of the rally since March.

That said, this info below is both interesting and intriguing. I gathered it a few months ago and posted it. The links below still work as I tested them just before posting this.

I'll leave it with you all.

talktome



A Second Mortgage Disaster On The Horizon?
60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default (Dec 2009)




The trouble now is that the insanity didn't end with sub-primes. There were two other kinds of exotic mortgages that became popular, called "Alt-A" and "option ARM." The option ARMs, in particular, lured borrowers in with low initial interest rates - so-called teaser rates - sometimes as low as one percent. But after two, three or five years those rates "reset." They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500.

Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

"The defaults right now are incredibly high. At unprecedented levels. And there�fs no evidence that the default rate is tapering off. Those defaults almost inevitably are leading to foreclosures, and homes being auctioned, and home prices continuing to fall," Tilson explains.

"What you seem to be saying is that there is a very predictable time bomb effect here?" Pelley asks.

"Exactly. I mean, you can look back at what was written in '05 and '07. You can look at the reset dates. You can look at the current default rates, and it's really very clear and predictable what's gonna happen here," Tilson says.

Just look at a projection from the investment bank of Credit Suisse: there are the billions of dollars in sub-prime mortgages that reset last year and this year. But what hasn't hit yet are Alt-A and option ARM resets, when homeowners will pay higher interest rates in the next three years. We're at the beginning of a second wave.

"How big is the potential damage from the Alt As compared to what we just saw in the sub-primes?" Pelley asks.

"Well, the sub-prime is, was approaching $1 trillion, the Alt-A is about $1 trillion. And then you have option ARMs on top of that. That's probably another $500 billion to $600 billion on top of that," Tilson says.

Asked how many of these option ARMs he imagines are going to fail, Tilson says, "Well north of 50 percent. My gut would be 70 percent of these option ARMs will default."

Full 60 Minutes story in video and manuscript found here:

*** If the video doesn�ft work (�eThe Mortgage Meltdown�f on the left hand side), refresh your screen at least once, maybe twice***

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml?tag=contentMain;contentBody

If that above link doesn�ft work and you�fre still stuck and desperate, try this poor quality youtube link:

http://www.youtube.com/watch?v=kunB4SnAh4g&feature=PlayList&p=C10AC222E166ECF4&playnext=1&playnext_from=PL&index=7

Regards,

talktome