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- It should be kept in mind that if one starts with $5.757 trillion in mortgages, these $5.0 trillion in risky obligations are distinct from and in addition to the mortgages, and a total of $10.757 trillion is laden onto the homes and attached to the incomes of America's homeowners. A Mortgage-Backed Security is an instrument with its own risks, independent of those of the underlying mortgages. For example, a dramatic change in interest rates or even a significant increase in
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- , debt and liquidity artificially forced into the housing market over the past few decades, especially since 1995. This gives an estimate of the amount of hot air which will be wiped out in this market in a collapse of the bubble, driving home prices down with explosive impact.
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In fact, the percentage of loans in the foreclosure process was a little over 1 percent in the fourth quarter of 2004, the lowest rate since 2000, according to the Mortgage Bankers Association of America. Also, delinquency rates for all loans decreased last year, with the riskiest loans seeing the greatest decline.
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