The average number of days a borrower is delinquent before entering foreclose has now reached 631 days. We are closing in on the next major milestone; a full 2 years homeowners get to live for free in their homes after they stop making payments. What happens after these 2 years of prosperity? They pack their bags and move into a rental where they get to live maintenance free.
Remind me again why anyone would continue to make a payment once their home price fell below their mortgage amount and became under water? There are now 30% of homes underwater (and rising as home prices keep falling) with most of those home owners still paying and holding out hope. When these people make the logical decision to stop paying and live for free we will have the last leg down in the housing market.
At that point the losses will be socialized (seen in the rising price of gold and commodities) or prices will collapse and it will be buying time for the very patient investors that sit on the sideline.
