Many subprime borrowers have margins of up to 5.00% above their index. Prime ARM’s have lower margins. Never assume anything. Many people with high credit scores got screwed into a subprime ARM by a mortgage predator.
Most people with ARM’s have no clue what their margin or index is or what it’s based on or tied to.
Even if a borrower’s rate was to stay the same, their payment will go up in most cases as most must start paying P&I on an shorter amortization period.
If someone had a 3YR ARM interest only, upon adjusting, many will have a P&I payment due with a 27 YR amortization based on their new rate, which in most cases will adjust again in 6 or 12 months.
I believe that most of the talk of “walkers” and “jingle mail” is just urban legend BS.
People are foolish if they walk early or send in keys.
They are getting foreclosed on, most aren’t just “walking away”
Foreclosure is a legal process. It takes time. Leaving a house sit empty while you could be living there for free is pretty dumb, although there are a lot of dumb people involved.
I have read of cases where people have been in their houses for 12-16 months without paying before actually being foreclosed on.
Wait and see what’s lurking around the corner. To keep people from walking, they are talking about refinancing people into new loans for 120% of the value of the home today…
AND cutting the principal balances for others to reality today.
Think stock market crash with the govt trying to figure out how to keep people paying for the stocks that they bought with borrowed money at inflated levels, so they don’t dump them on the market to depress the market further.
Try ANYTHING to keep people from walking away…
The few in govt that really understand what is happening are crapping their pants. Others are just overpaid idiots.
Jenna Bush is consummating her marriage tonight, I wouldn’t be surprised if her daddy had a few extra drinks today. It was a perfect excuse so he can get one good nights sleep.
His headache isn’t going to be gone in the morning.
