My first take on this was that the whole thing might be avoided because if interest rates do stay at historic lows then homeowners could refinance and the "resets" would never take place (the assumption all along.) Then I realized that someone who took out one of these mortgages propbably has no equity at this point, and might even be underwater, so they would not be able to refinance anyway. They would walk away. The cycle will never end.
All we can hope is that the low interest rates bring out the buyers, so the sellers in trouble can sell and get rid of these horrible loans forever. I don't think it means prices will drop further personally. But they certainly won't rise either if we are going to have this pain for the next 3 years still.
I do believe that the second wave is coming and its real.
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