> but still shows your ability to pay. I wasn't being clear: It doesn't matter that you can pay, it matters that you will pay. (Four months is nothing to the

> but still shows your ability to pay. I wasn't being clear: It doesn't matter that you can pay, it matters that you will pay. (Four months is nothing to the mortgage principal.) Look, the Fed is going to raise rates RSN. Which way does the high end of real estate go when interest rates come off zero %? So suddenly the homeowner is down 10% on the value of their $2M home. Is it worth it for them to mail in the keys to the bank for $200K and tell the collectors to pound sand? For a lot of people, yes. So the bank (or more accurately, the loan service) has to figure out how to send over two guys named Rocko with the power to get their money back. In the bubble, the solution was to lay off all the Rockos because, you know, housing never goes down. Maybe we're back to that state, which would be amazing, but I'd guess the banks are somehow covering for their liability on zero-down loans this time around. Edit for tcoppi's comment: s/FedIncrease/BlackSwan/ because home prices do decline for a variety of reasons. BTW: Implied probability of a Fed rate increase in Sept is back to where it was before Brexit. http://www.ft.com/fastft/2016/07/25/odds-of-16-fed-rate-rise-climb-to-nearly-50/ http://www.ft.com/fastft/2016/07/25/odds-of-16-fed-rate-rise... Edit for dragonwriter's comment (hn doesn't let replies go this deep?): Fed has been trying to normalize rates, and employment/gdp/cpi has been stabilizing. See the link above for implied prob from Fed Futures for how people are betting on Sept.