From the mouths of babes...

From the Pueblo Chieftain online, we have Dream repossessed.

Kevin McCarthy of U.S. Bank said mortgage payments can rise $100 to $500 a month when mortgage interest rates go up.

Many buyers who used adjustable-rate loans also didn't have to pay much of a down payment because they were borrowing the down payment too, McCarthy said. That means they were borrowing as much as 100 percent of the cost of the home, plus other expenses.

That gave the buyers a higher interest rate and required them to pay for mortgage insurance, he said.

The cumulative effect is that the buyer has little or no equity, McCarthy said, little incentive to save the home and a huge-and-growing amount of money to pay off.

"Anytime you borrow too much money it's harder to pay it back," he said.

No!!!! You don't say?!?

"You have a bit of a perfect storm," Sean McCarthy said.

The industry is learning its lesson now, he said, but it will be a painful one, both for buyers and the lenders who lose money on each foreclosure.

"The market is healing itself," Sean McCarthy said. "But it takes a year or two of bloodletting."

Last time I saw a bloodletting, it was ER time not "healing" time! Come to think of it, that's not a bad metaphor to what's going to happen to the US economy.