What value investor John Hussman fears most now is the mountain of mortgage resets and probable defaults that will begin later this year and extend into 2012.

“While our unelected bureaucrats have spent over a trillion dollars to make reckless lenders whole, they have done nothing to materially ease foreclosures or avert the oncoming second wave,” he told clients in a note.

A recent report showed that mortgage delinquency rates in California shot up in March, signaling that foreclosure rates will continue to approach record levels over at least the next six months.

California real estate broker Mark Goldman says that foreclosure rates will grow over the near-term because falling prices are coupled with reduced employment and reduced household income.

“I mean, what magic is going to keep people in their homes?" Goldman said in the North County Times.

On stocks, Hussman says bear markets tend to experience a series of separate lows on what I'd call recognition, fear, and revulsion, he says.

“That cycle of decline, followed by hope, followed by fresh losses, is really what ultimately puts a final low in place,” Hussman writes in a letter to investors.

"It would be very convenient if it was possible to buy the fear lows, participate in the bear market rallies, sell at the peaks, and repeat," Hussman says.

"Unfortunately, ‘fear’ lows are only evident in hindsight."

Markets tends to go through a great deal of sideways action after panics, Hussman notes, adding that it’s likely that stocks will trade in a very wide 25 percent to 35 percent range for months.