Part 3/15:
While similar issues surface, Melody asserts that this impending crisis could eclipse 2008 in severity for several reasons. Overbuilding, the consumer’s financial exhaustion, and preexisting intervention measures are critical factors. She notes that current delinquency figures, especially in September, are rising sharply, signaling stress that could lead to widespread defaults.
She warns that current guardrails, such as those on FHA programs, could be loosened or removed if the crisis deepens, further destabilizing the market. The key difference now is that many prime loans structured with inflated credit scores are vulnerable—prime borrowers are already showing signs of distress, breaking the assumption that only subprime borrowers are at risk.