I think is to be expected to just now see the beginning of the NOD/NOT numbers going up, the worst is yet to come, here’s why.
If you look at a reset graph, there is about a 2 year bulge that just starts to rise this month, will increase over the next 6 months and stay high for a year and begin to decline over the last six months.
Souther California Loans from 2003-2006 were primarily agjustable, S.D. was over 80% in new loans for some of those years, I don’t know the breakdown of the various types of adjustable loans.
Interest rates are a little higher than they were at the time the loans were made, even if the rates were the same, the payments would jump, for some it will be much worse depending on the loan terms.
Both lifeboats have been lost for people unable to handle the reset payments, they can’t sell and they can’t refi (some not all but it gets worse every month).
A Nod takes three or months to show up, a not can be longer, meaning that todays nods and nots were in trouble between nov 06 to feb 07, pre subprime implosion and there were still bigger fools at that time.
Most people, even subprime people can survive a few months before missing mortgage payments by borrowing from relatives, credit cards, etc. So I think they were in trouble even further back, summer 06 when things got tough and it was a smaller number of people than those today, there was more hope last year, less chance of walking away and more chance to try and hold it together, today the message from realtors, friends, the media, is more likely to paint a gloomier picture than last year.
So what we have with today’s reset payment recipient, to use the analogy of a ship at sea, the number of bodies we are finding washing ashore today were aboard a small ship that sank, close to shore in calm water with sufficient life boats. Right now, bigger ships are sailing further from shore, into rough weather and without lifeboats, in addition there are more of those boats and even more behind them with fewer coast guard ships to save them. And the boat that sinks today, those that are treading water will give up sooner because they won’t know which way to swim.
Morbid analogy but that’s how I see it, you NOD/NOT list will be twice what it is today in six months.
