Now that subprime mortgages have crashed (and brought a portion of the economy with them), can the madness be over?
Maybe not.
Calculated Risk points out that Bill Fleckenstein is predicting that HELOCs are the next crash. And it makes sense.
HELOCs (home equity lines of credit) are starting to show losses. Bank of America is already reporting losses due to HELOCs, and it is only a matter of time before others follow suit. After all, with home values falling, many HELOCs are suddenly creating situations of negative equity.
Do you think HELOCs will cause the next mortgage market crash?
You mean they haven't already been part of the crash. It's hard to believe the value of home equity lines of credit hasn't already crashed.
Posted by: David Neubert | May 19, 2008 12:33 PM | Permalink to Comment