[CaptainK]

About 6 months before the crash a freeper posted that there was an upcoming tsumani of ARM mortgages in California that were coming due and would be re-rated at a higher interest rate, resulting in huge numbers of homeowners being unable to pay the new increased amounts. He/she predicted it would be a financial calamity

It stuck in my mind and shortly after that posting the S&P fell to 12000. I got spooked and I begged my husband to get out of the market and into cash. But we didn't.

If only.

[Brian Griffin]

“tsumani of ARM mortgages in California”

The mortgage problem in California was in large part due to a state law that was meant to protect purchasers, but didn’t. This law only applied to purchase mortgages.

The way for lenders to get around the law was to issue purchase mortgages with rising interest rates that the purchasers would have to finance.

But at refinancing time, values had dropped and credit was tight. The ARMs were financial toxic timebombs that exploded.