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"The real estate bubble is going to burst because of the mortgage industry, and the easy money."

That makes no sense. You got your mortgage. You got your house. It's not like anyone is calling your note. No one is taking your house. No one is accelerating your debt on your old notes.

On the other hand, if no one could get a new loan, it would be harder to sell houses in the future. People might drop their asking prices in order to sell their houses sooner.

But that would be a tight money environment, not an easy money situation.

I'm watching the used car market. In about 2 years all those people that got 0% financing are going to look to trade them in or sell it. Part of how a used car keeps its "value" is that you've still got to make payments on it due to interest, ie you can't sell the car for less as you have to still pay off some interest payments.

Now with that amount gone (lets call it the Interest Tax) you'll be willing to take less for your automobile. How much that is, I have no idea.

What is this going to do to the new and used car industry? Its hard to tell. Its going to be hard for GMAC to charge any reasonable amount of interest as people will have less to trade in and they'll get sticker shock "You mean I have to pay $50 more a month for the same car?".

It will mean that those of us that just buy used cars are going to have a lot of bargains.

Those that bought a car before 0% financing are going to be in a real pickle as they're going to try and sell a previous year's model for more money then the 0% guy.

Your point is well taken, and I fully understand the economics of the real estate industry. My apologies, because my remarks were unclear. I was referring to the corruption by crooked mortgage brokers, and loosey goosey programs like DPAPs, or down payment assistance programs that allow sellers mainly developers to make down payments, and contribute the buyer’s closing costs. The sales prices, and the appraisals are then inflated, and the difference between actual value, and the inflated sales price goes back to the sellers./developers.

Programs like this can be a valid means for people to become homeowners, but the problem is you can imagine who they are targeted at. They are mostly unqualified buyers who get inflated credit scores based on factors that have nothing to do with their credit worthiness. As a result the default percentages go up, and real estate values are affected.

BTW gig’um aggies.