Bush Mortgage Plan Assures Recession

The mortgage rescue plan to help subprime borrowers by President George W. Bush assures that the U.S. economy will fall into a deepening recession in 2008, perhaps even a depression, according to an in-depth analysis conducted by Housing Predictor.

More than 2-million mortgages made to subprime borrowers are due to have their interest rates increased in the next 18 months. The plan will help only an estimated 240,000 of those borrowers, according to Barclays Capital. Barclays determined this figure by extrapolating from a similar plan approved in California.

Many subprime borrowers cannot afford the new higher rates and are expected to suffer from foreclosure as a result.

Housing Predictor was the first to forecast that more than 3-million homes will be foreclosed as a result of the subprime crisis through 2009, and has not yet extended it’s forecast into future years. The credit crunch has produced the worst housing crisis since the Great Depression, slowing real estate sales in the over-whelming majority of the nation.

Home values in the majority of the country are falling as buyers have become uneasy over the nation’s financial future and are nervous about entering the market place or making a move to put their homes on the market to resell.

Investors on Wall Street are also nervous and financial markets continue to swing as a result of the credit crunch economic uncertainty.

The investment and real estate speculative market was at its highest threshold in the nation’s history at the height of the real estate market boom. In addition to the more than 2-million homes that will be foreclosed through the end of the year as a result of the subprime problem, an estimated 1.5-million homes, condos and other properties mortgaged by investors are due to have their interest rates reset in the next three years.

The crisis has broadly extended into the conventional mortgage market and is expected to take a major toll on the national economy sending it into a major recession at the least, which the Bush administration won’t have to deal with in the future.

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source: prleap.com