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One issue that may be impacting the administrations decision making process is that many of the mortgage defaults are in southern California and Florida, both big Obama voting blocks. We also see much of the administration's Congressional support coming from these states along with other high tax, high cost of living states, such as New York, Conn., and Mass.

The cost of living in these states make almost all home buyers sub-prime due to housing cost vs income. The other issue is that many of these mortgages were packaged by Freddie and Fanny, quasi government entities, and then resold to banks with a government guarantee.

While we have not reached the bottom of this market, we are seeing the damage centralized in those areas that saw the fastest growth. All things do seem to regress to the mean.

What is chilling is that with tax short falls due to the decline in property values and job losses, these areas are adding taxes and fees, thus extending and adding to their economic decline.

Steve Lucas

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