Why the next mortgage crisis may be worse. - By Mark Gimein - Slate Magazine: "Unfortunately, the crisis in California is going to get much worse, and there is no bailout that will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages."
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His argument is that prices are collapsing big time, and tens of thousands of people who had ARMs with little or nothing down will be upside down on their mortgages by far more than any government bailout can cure, and with no equity to protect anyway. The only rational option open to them is to walk away.
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