So, it seems that Philadelphia is the first US city to halt foreclosures. Hmmm… Reuters Article Perhaps this is the calm before the storm. If we have seen the worst of the subprime mess I think we are gravely mistaken and kidding ourselves.
If foreclosures are halted what does this mean for the financial system? Obviously the banks won’t be getting paid because the homeowners are foreclosing due to the inability to pay. Therefore, banks can’t liquidate homes nor do they get paid so the situation spirals out of control. This might help keep housing prices from completely falling through the floor because they won’t be on the market, but again I’m not optimistic.
Okay so people can’t pay their mortgages, won’t be able to borrow any money unless it is on their almost already maxed out credit cards, which will eventually end up in default as well once they lose their jobs.
Again this is complete speculation, but I don’t see how it can be that farfetched.
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