Subprime was just the beginning. Wait until California's prime borrowers start handing their keys to the bank.

Why the next mortgage crisis may be worse. - By Mark Gimein - Slate Magazine

Just two banks, Washington Mutual and Countrywide, wrote more than $300 billion worth of option ARMs in the three years from 2005 to 2007, concentrated in California. Others—IndyMac, Golden West (the creator of the option ARM, and now a part of Wachovia)—wrote many billions more. The really amazing thing is that the meltdown in California is already happening and virtually none of these loans have yet reset.

* In San Bernardino, a house bought for $310,000 in 2005 is now being offered by the bank for $199,900. * A 2,000-square-foot ranch house in Rancho Santa Margarita is down from $775,000 to $565,000. * A starter home in Sacramento, sold for $215,000 in 2004, is now down to $129,900.

These are not sale prices. They are asking prices. Don't doubt that they are negotiable.