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How much your home value is affected by the subprime mortgage meltdown?
Paula Ranske
Jul. 16, 2007

A question that lingers in many minds is how far will the real estate fall? How much does this subprime mortgage meltdown affect the home prices? The answer lies in the level of disclosures by the financial institutions. According to one estimate, this is just tip of the iceberg. Take the example of New Century Financial. They did not disclose ant of their trouble till they were ready to belly up.

According to some estimates, the meltdown is contained within 100 billion dollars. In that case expect a recovery in home price within twelve months. But many suspect that the banks and financial institutions are hiding the fire with a rag, while not knowing how much fuel is burning. Estimates range from $100 billion to $500 billion. The trouble is that the subprime defaults are fast spreading to other mortgages. If that persist, there is serious trouble.

Federal regulators are working day and night to being the situation under control. But the damage may have been done already. If the subprime mortgage meltdown explodes, the real estate across the whole country can go down by 40% within two years. That will bring recession very fast.



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