Yeah, I know what you mean. There’s that one guy who’s the president of Paramount Equity Mortgage or something like that. Who in a creepy whispery voice keeps claiming “I will beat any written rate or fee structure” over & over again… “give me a chance to blow you away.” Creepy I tells ya! Or how about those ads on the internet that say “$400,000 mortgage w/ a $800/month payment”. Is that advertisement even legal?
Cardiffbaseball, It’s the 5yr fixed loans at 1.25% that get me wondering. I know it’s probably some cheap ploy to hook you in or maybe a loss leader on a very small percent of borrowers that qualify. But if all of these people with their ARMs resetting in the next year can simply roll the debt over into a new teaser-rate loan, then the bottom of the market my be closer than many of us think. My son plays soccer with a boy whose mom is a mortgage banker for WAMU. I mentioned the resetting loans to her, and she just shrugged and said “we’ll just get them into new loans…” I asked her if there would be difficulty getting appraisals that would allow for a refi in this declining market, and she did not seem to think it would be a problem.
I recently worked in the finance department of a local SD bank, and I’ve got to say that a lot of the appraisals have me scratching my head. The bank was proud of their “strong” portfolio which was 80% in ARMS and I/O, because they only had one loan with an LTV higher than 75% (and it had PMI). When I came across a troubled loan that was getting close to default, the LTV was supposedly at 60% (original), but when I looked at comps to this property the current LTV was more like 110%. I know there are some solid, honest appraisers out there, but it seems there are a lot out there that do what they have to in order to make the deal happen & keep there lender relationships.
I guess the point of that tangent is that I’m not so sure that the troubled-borrower facing ARM reset will…
1) Have too much trouble getting refinanced into another teaser ARM.
2) Have too much trouble finding a lender w/ an appraiser who will magically find the right value to get the deal done.
