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divemedic
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Lately, it seems to me that we are seeing alot more people who are looking for DS companies than before. Is it just me? If we are, then it is a symptom of a looming problem, I think. Perhaps we are getting ready to see a new wave of defaults and BK, perhaps caused by the (now) rising interest rates.

What do you think?

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I think a lot of it has to do with the new bankruptcy law as much as anything. For the first year, a LOT of people really believed that they just couldn't file BK any more, and creditors and collectors alike fueled that misinformation actually telling people they couldn't file on a debt, or at all - which is hogwash. People now know that BK IS still availiable to them, but with the doubled + fees that BK lawyers now charge, people are likely thinking that DS will help them and not cost as much as a BK attorney, and not 'hurt' as much as a BK. As we all know, they are being misled.

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One in five subprime mortgages originated in '05 and '06 will end in foreclosure.

This info is from www.responsiblelending.org

Washington, DC – December 19, 2006 – A new Center for Responsible Lending (CRL) study reveals that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market. Titled, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," the CRL study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006.

CRL's research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4%) subprime loans issued during 2005-2006 will fail.

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A lot of people dipped into their home equity in 2005 and 2006. Pushed on by the lending industry into believing they should tap their equity in their home to pay off credit card and other higher interest debt. In turn a lot of people started spending more. Also those loans with the 2 to 3 year interest only terms are now switching to fully amortized which is making the payments go way up. People with them got used to having extra cash each month and now their mortgages are getting bigger payments.

Those HELOC lines mostly had very low teaser rates which are now balooning into large 2nd mortgage payments. (guilty here. My old house, now a rental, has a HELOC and the interest has gone from 1.5% to nearly 13% in just 2 years) I strongly suspect that is what is bringing many people to the DS table. These HELOC lines gave people easy credit at the expense of their homes.

I can't say this enough: NEVER TRADE UNSECURED DEBT FOR SECURED DEBT.

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Take my word for it, peeps - January and February are typically the busiest months of the year for this site, 10 years in a row. It's mostly that now the holidays are over, people are seeing their credit card bills and also doing the New Year's resolution thang.

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