Actually, about 40 percent of the population has a 720 or higher. And my guess is that 70 percent of all homeowners have 20 percent equity, especially if you bought 5 years ago or more. Plus most new buyers will have 20 percent down if they want to get the best rates.
The hardest hit will be the 0% down, stated income borrowers.
Those that bought what they could afford, will refi to get the better rate, but the ones who need it are screwed. I have tracked my last house (sold at $550K) and the buyer put 20% down. It was last valued at $380K) So technically he's fine since his 20% is now 28%, but he was the exception to the rule. The first offer we had was from some guy with stated income, married, wife pregnant with twins and was going to go $10K over what he was qualified for to get it.
I'd like to see interest rates set at 5% for anyone past due by 2 months on payments as of a certain date without it being pre announced. That would stop a lot of the balloon parts of the mortgage and save some houses.
Thoughts.