Just finished talking with a co-worker who's SO is a high-end realtor and property owner...

[SWBTATTReg]

9. Interesting. Wonder what will happen to all of the home equity loans based upon the higher

appraised values which are now a significant percentage below the original appraised values? Will loans be called in, will banks foreclose more and more (I can't see them doing this, and adding to the glut, thus driving prices down more). Will underwater homeowners simply stop paying on these adjustable-rate mortgages and still stay in the houses (like they did before in the last housing crash)?

Will this lead to higher interest rates across the entire board (yes, IMHO) and will this lead to less credit overall (fewer credit cards, reduced credit balances, stricter terms by banks, etc. (yes to all, IMHO).

Personally, I think this is long overdue, so I hope that there isn't too much pain. And in the long run, some will benefit, the new buyers perhaps (but watch your mortgages, don't get stuck in one you can't easily refinance). To those corporate types who have been preying on the housing markets, it kind of serves you right. There's going to be a glut of rental properties available, so you'll have to either drop rental prices down to keep your properties rented or you'll be forced to sell off some of your properties when the bank(s) demand more collateral to back up your loans.