60 Minutes – 2nd Wave – Option ARMS+ALT As

[(former)FormerSanDiegan]

[quote=patb]

All the non conventional mortgages are dead meat.

it’s just a matter of time[/quote]

Define non-conventional.

If you mean anything that is an ARM (as opposed to fixed rate) you are wrong.

Until last year I had an adjustable rate loan that was interest only for 5 years on a rental property in San Diego (oooh, SCARY !).

Unfortunately, since I am conservative (from an investment point-of-view) I made the mistake of refinancing into a fixed rate loan last year at 6.25%. If I had kept my “dead meat” loan my reset would have been below 5.25%. I’m pretty sure I would have been OK paying a couple hundred per month less on my loan. In the long run I guess that’s the insurance I am paying to keep my fixed rate.

[34f3f3f]

[quote=DWCAP] So we will have 5-8 years of housing pain instead of 3 years of housing chaos.[/quote]

DWCAP is onto something. Attempts to prolong the pain, may just mean that the economy recovers before the housing crisis is completely played out.

[34f3f3f]

[quote=DWCAP] So we will have 5-8 years of housing pain instead of 3 years of housing chaos.[/quote]

DWCAP is onto something. Attempts to prolong the pain, may just mean that the economy recovers before the housing crisis is completely played out.

[34f3f3f]

[quote=DWCAP] So we will have 5-8 years of housing pain instead of 3 years of housing chaos.[/quote]

DWCAP is onto something. Attempts to prolong the pain, may just mean that the economy recovers before the housing crisis is completely played out.

[34f3f3f]

[quote=DWCAP] So we will have 5-8 years of housing pain instead of 3 years of housing chaos.[/quote]

DWCAP is onto something. Attempts to prolong the pain, may just mean that the economy recovers before the housing crisis is completely played out.

[34f3f3f]

[quote=DWCAP] So we will have 5-8 years of housing pain instead of 3 years of housing chaos.[/quote]

DWCAP is onto something. Attempts to prolong the pain, may just mean that the economy recovers before the housing crisis is completely played out.

[Fearful]

[quote=FormerSanDiegan]The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
[/quote]
There are two separate factors. One is that these are ARMs and can reset to prohibitive interest rates. The other is that these are Alt-A, meaning that their overall affordability, even at the initial interest rate, is in doubt. From Wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of “conforming” or “agency” mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.

There are numerous factors that might cause a mortgage not to qualify under the GSEs’ lending guidelines even though the borrower’s creditworthiness is generally strong. A few of the more important factors are:

* Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
* Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
* Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan (for example, low scores or serious delinquencies, but no recent charge-offs or bankruptcy)
* Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

[end]

Simply put, these are mortgages that, even initially, were not affordable enough for the GSEs to buy.

Lower reset interest rates help the Alt-A problem, but they absolutely do not make it go away. It might not be a tsunami, but not a ripple either. Unfortunately, the underlying data on the mortgages is poor, so no one knows for sure how unaffordable the mortgages are, and one is forced to go back to more broad metrics such as house price to income ratios.

[Fearful]

[quote=FormerSanDiegan]The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
[/quote]
There are two separate factors. One is that these are ARMs and can reset to prohibitive interest rates. The other is that these are Alt-A, meaning that their overall affordability, even at the initial interest rate, is in doubt. From Wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of “conforming” or “agency” mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.

There are numerous factors that might cause a mortgage not to qualify under the GSEs’ lending guidelines even though the borrower’s creditworthiness is generally strong. A few of the more important factors are:

* Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
* Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
* Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan (for example, low scores or serious delinquencies, but no recent charge-offs or bankruptcy)
* Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

[end]

Simply put, these are mortgages that, even initially, were not affordable enough for the GSEs to buy.

Lower reset interest rates help the Alt-A problem, but they absolutely do not make it go away. It might not be a tsunami, but not a ripple either. Unfortunately, the underlying data on the mortgages is poor, so no one knows for sure how unaffordable the mortgages are, and one is forced to go back to more broad metrics such as house price to income ratios.

[Fearful]

[quote=FormerSanDiegan]The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
[/quote]
There are two separate factors. One is that these are ARMs and can reset to prohibitive interest rates. The other is that these are Alt-A, meaning that their overall affordability, even at the initial interest rate, is in doubt. From Wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of “conforming” or “agency” mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.

There are numerous factors that might cause a mortgage not to qualify under the GSEs’ lending guidelines even though the borrower’s creditworthiness is generally strong. A few of the more important factors are:

* Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
* Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
* Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan (for example, low scores or serious delinquencies, but no recent charge-offs or bankruptcy)
* Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

[end]

Simply put, these are mortgages that, even initially, were not affordable enough for the GSEs to buy.

Lower reset interest rates help the Alt-A problem, but they absolutely do not make it go away. It might not be a tsunami, but not a ripple either. Unfortunately, the underlying data on the mortgages is poor, so no one knows for sure how unaffordable the mortgages are, and one is forced to go back to more broad metrics such as house price to income ratios.

[Fearful]

[quote=FormerSanDiegan]The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
[/quote]
There are two separate factors. One is that these are ARMs and can reset to prohibitive interest rates. The other is that these are Alt-A, meaning that their overall affordability, even at the initial interest rate, is in doubt. From Wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of “conforming” or “agency” mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.

There are numerous factors that might cause a mortgage not to qualify under the GSEs’ lending guidelines even though the borrower’s creditworthiness is generally strong. A few of the more important factors are:

* Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
* Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
* Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan (for example, low scores or serious delinquencies, but no recent charge-offs or bankruptcy)
* Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

[end]

Simply put, these are mortgages that, even initially, were not affordable enough for the GSEs to buy.

Lower reset interest rates help the Alt-A problem, but they absolutely do not make it go away. It might not be a tsunami, but not a ripple either. Unfortunately, the underlying data on the mortgages is poor, so no one knows for sure how unaffordable the mortgages are, and one is forced to go back to more broad metrics such as house price to income ratios.

[Fearful]

[quote=FormerSanDiegan]The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
[/quote]
There are two separate factors. One is that these are ARMs and can reset to prohibitive interest rates. The other is that these are Alt-A, meaning that their overall affordability, even at the initial interest rate, is in doubt. From Wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of “conforming” or “agency” mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.

There are numerous factors that might cause a mortgage not to qualify under the GSEs’ lending guidelines even though the borrower’s creditworthiness is generally strong. A few of the more important factors are:

* Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
* Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
* Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan (for example, low scores or serious delinquencies, but no recent charge-offs or bankruptcy)
* Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

[end]

Simply put, these are mortgages that, even initially, were not affordable enough for the GSEs to buy.

Lower reset interest rates help the Alt-A problem, but they absolutely do not make it go away. It might not be a tsunami, but not a ripple either. Unfortunately, the underlying data on the mortgages is poor, so no one knows for sure how unaffordable the mortgages are, and one is forced to go back to more broad metrics such as house price to income ratios.

[sdrealtor]

I had an Option ARM on a flip a couple years back and one of my clietns who just sold their home had one too. They may have been the only people paying the 30yr fully amortized payment with extra principal payments every month too. Thats at least 2 out of the pipeline.

Point being while alot of them could be toast, ALL of them are NOT.

[sdrealtor]

I had an Option ARM on a flip a couple years back and one of my clietns who just sold their home had one too. They may have been the only people paying the 30yr fully amortized payment with extra principal payments every month too. Thats at least 2 out of the pipeline.

Point being while alot of them could be toast, ALL of them are NOT.

[sdrealtor]

I had an Option ARM on a flip a couple years back and one of my clietns who just sold their home had one too. They may have been the only people paying the 30yr fully amortized payment with extra principal payments every month too. Thats at least 2 out of the pipeline.

Point being while alot of them could be toast, ALL of them are NOT.

[sdrealtor]

I had an Option ARM on a flip a couple years back and one of my clietns who just sold their home had one too. They may have been the only people paying the 30yr fully amortized payment with extra principal payments every month too. Thats at least 2 out of the pipeline.

Point being while alot of them could be toast, ALL of them are NOT.

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