Upside Down Mortgage

Subprime Loan Default Rate

Question: Can you give me an individual example of a subprime loan trouble situation?

If the interests rates are going down, then should'nt this give rise to a higher demand for housing loans? Or if there is such a massive default on loans, then shouldn't home prices fall thereby making them now more affordable to the sector that can really afford it?

Answer: Humans do not buy when prices are low and sell when prices are high, instead they often do the opposite. When people see prices go down they get scared and often sell not because they need to but because they fear prices will continue to go down. When people see prices go up they get excited and buy even when they have no need for a larger house because they think prices will continue to go up.

To become rich you need to think differently in both situations.

12-15-08 Charles Gradante on Bloomberg TV w/ Matt Miller Discussing the Bernard Madoff Scandal

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