Bill Gross, founder and chief investment officer of PIMCO, the world’s largest family of bond funds with $746 billion in assets under management, believes that without government intervention, home prices could drop as much as 20 percent over the next two years. U.S. News spoke with Gross about what he thinks the government should do to prevent such losses. Excerpts:  Why do you think housing prices are declining?
The simplest explanation is because they went up too much…. It’s hard for a home to go down in price significantly unless there’s been a bubble. The reason for a significant bubble is not only low interest rates back in the 2003-2004 time period but a significant amount of near-fraudulent behavior in the mortgage market with no-documentation loans and—[as] I call them—”funny money” mortgages.

read the rets published by US News here:

http://www.usnews.com/articles/business/economy/2008/02/04/bond-guru-bill-gross-on-the-housing-crisis.html