The recent Diane Rehm show, which you can listen to here: 4/10/07 Diane Rehm Show , discusses the USA economy and housing, subprime lending and the forthcoming foreclosure boom.  Currently over 0.5% of all mortgages go to foreclosure.  This is about 100,000 loans per month over the last 5 months. The panel states that these numbers can go up.  The major reason for the rise in forclosure rates are the subprime loans taken our during the last few years.  Subprime loans were given to people, often, but not always, based and false pretences or fraudulant data.  Often it's the lender to blame as much as the borrower.  It's not only the subprime loans that are an issue but adjustable loans, which Greenspan promoted as a way for more people to get intohomes, as well. In certain areas housing prices have decreased as much as 40% and homeowners cannot even refinance due to the lower values. 

Some call for more transparency in lending and others say that there should not be stated income loans at all.  I, Artur, tend to disagree on this point for certain borrowers.  But, only with really good credit ratings and a good payment history.  Part 2 to follow.