The tremendous amounts of foreclosures and delinquencies that are occurring across the nation, and that are predicted to occur in the near future is an issue that will undoubtedly affect the whole economy (not just the housing market) for years to come.

How bad it will affect our nation’s economy is something that is yet to be determined.

But what we know right now is that thousands (if not millions) of homeowners are posed to loose their homes to foreclosure over the next few years; and it is not just those with bad credit and low paying jobs.

Homeowners with steady income and good credit are also susceptible to foreclosure if they took out a loan for more than they really could afford and will not be able to make the larger payments when their introductory period is over.

A recent article by Rex Nutting of Market Watch and posted in The Wall Street Journal, “Will ‘lemming loans’ drive the economy off the cliff,” discusses the extreme problems we are seeing right now with the mortgage market.

“It also affects people with good enough credit to qualify for a prime loan. Known as Alt-A mortgages, these loans were written for 1 in 5 U.S. mortgages and could have a big impact on the economy and on credit markets -- bigger, perhaps, than the effects of the recent shockwaves buffeting the subprime-lender market, economists say.”

“In coming months and years, the credit crunch that's now squeezing mainly the poor is likely to hit millions of middle-class homeowners who took out risky loans during the great housing boom earlier in the decade. More than 1 million families will lose their homes in the next few years, by one estimate. Another study predicts 2.2 million foreclosures.”

These risky loans enabled homeowners to get into a much larger and more expensive home than they could really afford. Most of these loans have low payment introductory periods that reset to current rate standards; increase the homeowner’s monthly payment by hundreds of dollars a month.

“Because this risk is so novel, experts don't have a clear grasp yet on how big of an impact the credit crunch might have on the economy. Most economists say the problems won't spread too far beyond the poor, and that the extent of the losses to families, mortgage underwriters and investors will be small in the context of a $13 trillion economy. But others think the risks are widespread and that the economy could be hit hard by the failures in the credit market. It could take years to fully recover.”

There are many underlying factors that are associated with the mortgage problems and could have a detrimental affect on the housing market and overall economy.

“According to a Credit Suisse report, tighter lending standards, increased foreclosures, more supply on the market, lower prices, and less construction of new homes will affect all parts of the market.  ‘It's not just a subprime issue,’ Ivy Zelman, a housing analyst for the bank, wrote in the report.”