Thanks for the very good commentary in both interviews Jonathan. The transparency and straight talk is not only refreshing but critical if we are to work through this cycle in the most optimum and sensible manner possible.

Your observation on the correlation between negative or declining equity and the rate of foreclosure was key to understanding the situation as we go forward. I also agree with your comment on the impact Mr. Paulson’s new sub prime interest rate initiative – it won’t have enough strength to sufficiently shore up market driven price levels and will do little for those who currently can’t handle their current mortgages. At best it will help stem the rising tide of resets.

I belive the other problem yet to be recognized is the huge effects to be realized from the sharp drop off in home equity loans. As appraisers, we know a ton of them were made since 2002. Without question these borrowings fueled a wide range of discretionary consumer purchases such as autos, travel, home improvements, elective medical procedures, boats, etc. The funds were also used to pay down credit card balances and even finance a borrower’s small business. The home equity credit crunch and resulting trickle down is already being felt among increasing numbers of small businesses owners (with a mortgage or two, residential and small commercial as well) who already operate on the edge. I all too well recall how the small business owner took some major body blows in the last market fallout.