The economic scenario seems to be getting worse as the financial sector continuously reporting huge losses from exposure to the mortgage market. Even the residential sector, the commercial real estate sector, and sectors like credit cards, auto loans are moving to a negative territory and are quite at risk.

However, default mortgage rates this year have already shaken the financial sector. And now it is expected that millions of adjustable rate mortgages will reset, giving higher interest rates (according to the new loan agreement), which is just impossible for the homeowners to pay. But the homeowners, who are having $600 billion of subprime adjustable rate mortgage loans that is the ARM, are about to reset at higher amounts during the next eight months. Its not all the mortgages that are in trouble but homeowners who default or fall behind on the payments are a problem.

Now the situation is such that this mortgage crisis is forcing people to get out of their homes, besides hampering the economy as a whole. It is expected that the housing slump may get worse by more empty homes in the market, causing prices to plunge by up to 40% in real estate spots, such as California, Florida, and Nevada.

According to a recent report by the Goldman Sachs, the estimated industry wide losses from declines in the market value of subprime mortgage related collateralized debt obligation, to be almost $150 billion. Moreover, the third quarter write-off settled down at $18 billion from the financial firms but some firms indicated that the write-off in the fourth quarter would come to $22 billion. However, the losses could even hit $300 billion, as estimated by the Organization for Economic Cooperation and Development.

This worse situation of the housing sector is resulting into bigger problems, that is the unemployment and the higher consumer losses. It is estimated that almost 100,000 financial services jobs related to the credit and lending have already been lost, from local bank loan officers to traders dealing in mortgage backed securities. And moreover, this kind of countless job losses would curtail consumer spending that makes up two-thirds of the economy. However, thousands of workers of the housing industry could loss their job and it is expected that this would affect the car dealers, retailers and other dependent on the consumer paychecks badly.

Other indication shows that borrowers who took out loans in the first six months of this year are already falling behind on their payments as compared to the borrowers who took out loans last year. And this is making it harder for would be buyers to get new mortgages. This is infact, is a frightening indication for the homebuilders with projects going begging on the market, and also for the homeowners desperate to unload property to avoid default on their loans.

Besides these sectors, there is one more vital sector that is foreclosure. The number of homes in foreclosure is expected to move high after more than doubling during the third quarter as compared to year earlier, to 446,726 homes nationwide. This is one foreclosure filing for every 196 households in the nation, a 34% jump from three months earlier.