ARM Freeze, What happens after 5 Years??

[jyurasek02]

My question on this proposed ARM freeze, and I know it is a bit of a dead horse on this forum, is what happens after the 5 years are up? The banks still owe their balances and promised returns to the buyers of the MBS right? Will the rates then reset to an even higher rate, based on the outstanding balance the borrower owes on the principle? Is it possible that this freeze will have an adverse effect on mortgage rates as a whole? Will rates rise to cover rhe money not being provided by these frozen loans? The whole thing seems fishy to me.

I am trying to get my arms around this issue and understand the economic effect it will have especially considering all of our money is tied up in foreign investments and our dollar is falling and inflation is on the verge of being out of control. Freezing the rates seems like the problem is just going to be worse in five years when the borrowers still don’t have equity and the rates then reset to a higher rate. I have been reading the book by Schiff called “Crash Proof” and it has opened my eyes to a lot of these topics. Still trying to digest and understand this crazy economic situation we are in right now.

[patientrenter]

jyurasek, put yourself in the shoes of many of the participants who are in this up to their necks.

If you’re head of a bank or hedge fund with a lot of exposure, you’re out of a job for certain if home prices drop a lot now. This plan may get you 5 more years. That’s better than 5 more months. And at the end of the 5 years, who knows, maybe your losses won’t be so bad, or maybe not. At least you get 5 more years, and a second bite at the apple at the end.

Yes, total ultimate losses may be deeper by waiting 5 more years, but each individual participant facing ruin now doesn’t care about that. From an individual perspective, nothing is worse than an immediate 100% loss. If a bank’s losses are terrible 5 years from now, the CEO won’t be worse off than if he’s fired today.

If efforts to boost home prices fail, then the Fed and other govt institutions will try everything in their considerable power to inflate while keeping (at least some key) interest rates low.

Patient renter in OC

[patientrenter]

jyurasek, put yourself in the shoes of many of the participants who are in this up to their necks.

If you’re head of a bank or hedge fund with a lot of exposure, you’re out of a job for certain if home prices drop a lot now. This plan may get you 5 more years. That’s better than 5 more months. And at the end of the 5 years, who knows, maybe your losses won’t be so bad, or maybe not. At least you get 5 more years, and a second bite at the apple at the end.

Yes, total ultimate losses may be deeper by waiting 5 more years, but each individual participant facing ruin now doesn’t care about that. From an individual perspective, nothing is worse than an immediate 100% loss. If a bank’s losses are terrible 5 years from now, the CEO won’t be worse off than if he’s fired today.

If efforts to boost home prices fail, then the Fed and other govt institutions will try everything in their considerable power to inflate while keeping (at least some key) interest rates low.

Patient renter in OC

[patientrenter]

jyurasek, put yourself in the shoes of many of the participants who are in this up to their necks.

If you’re head of a bank or hedge fund with a lot of exposure, you’re out of a job for certain if home prices drop a lot now. This plan may get you 5 more years. That’s better than 5 more months. And at the end of the 5 years, who knows, maybe your losses won’t be so bad, or maybe not. At least you get 5 more years, and a second bite at the apple at the end.

Yes, total ultimate losses may be deeper by waiting 5 more years, but each individual participant facing ruin now doesn’t care about that. From an individual perspective, nothing is worse than an immediate 100% loss. If a bank’s losses are terrible 5 years from now, the CEO won’t be worse off than if he’s fired today.

If efforts to boost home prices fail, then the Fed and other govt institutions will try everything in their considerable power to inflate while keeping (at least some key) interest rates low.

Patient renter in OC

[patientrenter]

jyurasek, put yourself in the shoes of many of the participants who are in this up to their necks.

If you’re head of a bank or hedge fund with a lot of exposure, you’re out of a job for certain if home prices drop a lot now. This plan may get you 5 more years. That’s better than 5 more months. And at the end of the 5 years, who knows, maybe your losses won’t be so bad, or maybe not. At least you get 5 more years, and a second bite at the apple at the end.

Yes, total ultimate losses may be deeper by waiting 5 more years, but each individual participant facing ruin now doesn’t care about that. From an individual perspective, nothing is worse than an immediate 100% loss. If a bank’s losses are terrible 5 years from now, the CEO won’t be worse off than if he’s fired today.

If efforts to boost home prices fail, then the Fed and other govt institutions will try everything in their considerable power to inflate while keeping (at least some key) interest rates low.

Patient renter in OC

[patientrenter]

jyurasek, put yourself in the shoes of many of the participants who are in this up to their necks.

If you’re head of a bank or hedge fund with a lot of exposure, you’re out of a job for certain if home prices drop a lot now. This plan may get you 5 more years. That’s better than 5 more months. And at the end of the 5 years, who knows, maybe your losses won’t be so bad, or maybe not. At least you get 5 more years, and a second bite at the apple at the end.

Yes, total ultimate losses may be deeper by waiting 5 more years, but each individual participant facing ruin now doesn’t care about that. From an individual perspective, nothing is worse than an immediate 100% loss. If a bank’s losses are terrible 5 years from now, the CEO won’t be worse off than if he’s fired today.

If efforts to boost home prices fail, then the Fed and other govt institutions will try everything in their considerable power to inflate while keeping (at least some key) interest rates low.

Patient renter in OC

[cr]

…if you qualify for the bailout in the first place that is.

Then you’d have to be able to afford your house, (maintenance/repairs, taxes, insurance, HOA, mello roos, and of course payment) AND you’re keep your job through the 5 year period, when it ends, you still have to be able to pay for the payment that will inevitably rise. By this time you house may have depreciated by another, 25-50% maybe?

Of course you can’t sell and cover the value of your loan during this further prolonged period of price declines, so you’re now stuck, 10 years? 15 years? Until you can sell and at least break even.

That’s is of course assuming your job will not be negatively affected by the hit on the economy from this correction.

But I’m sure ol’ Helicopter Boy will keep flushing the toilet on the dollar to get through this.

[cr]

…if you qualify for the bailout in the first place that is.

Then you’d have to be able to afford your house, (maintenance/repairs, taxes, insurance, HOA, mello roos, and of course payment) AND you’re keep your job through the 5 year period, when it ends, you still have to be able to pay for the payment that will inevitably rise. By this time you house may have depreciated by another, 25-50% maybe?

Of course you can’t sell and cover the value of your loan during this further prolonged period of price declines, so you’re now stuck, 10 years? 15 years? Until you can sell and at least break even.

That’s is of course assuming your job will not be negatively affected by the hit on the economy from this correction.

But I’m sure ol’ Helicopter Boy will keep flushing the toilet on the dollar to get through this.

[cr]

…if you qualify for the bailout in the first place that is.

Then you’d have to be able to afford your house, (maintenance/repairs, taxes, insurance, HOA, mello roos, and of course payment) AND you’re keep your job through the 5 year period, when it ends, you still have to be able to pay for the payment that will inevitably rise. By this time you house may have depreciated by another, 25-50% maybe?

Of course you can’t sell and cover the value of your loan during this further prolonged period of price declines, so you’re now stuck, 10 years? 15 years? Until you can sell and at least break even.

That’s is of course assuming your job will not be negatively affected by the hit on the economy from this correction.

But I’m sure ol’ Helicopter Boy will keep flushing the toilet on the dollar to get through this.

[cr]

…if you qualify for the bailout in the first place that is.

Then you’d have to be able to afford your house, (maintenance/repairs, taxes, insurance, HOA, mello roos, and of course payment) AND you’re keep your job through the 5 year period, when it ends, you still have to be able to pay for the payment that will inevitably rise. By this time you house may have depreciated by another, 25-50% maybe?

Of course you can’t sell and cover the value of your loan during this further prolonged period of price declines, so you’re now stuck, 10 years? 15 years? Until you can sell and at least break even.

That’s is of course assuming your job will not be negatively affected by the hit on the economy from this correction.

But I’m sure ol’ Helicopter Boy will keep flushing the toilet on the dollar to get through this.

[cr]

…if you qualify for the bailout in the first place that is.

Then you’d have to be able to afford your house, (maintenance/repairs, taxes, insurance, HOA, mello roos, and of course payment) AND you’re keep your job through the 5 year period, when it ends, you still have to be able to pay for the payment that will inevitably rise. By this time you house may have depreciated by another, 25-50% maybe?

Of course you can’t sell and cover the value of your loan during this further prolonged period of price declines, so you’re now stuck, 10 years? 15 years? Until you can sell and at least break even.

That’s is of course assuming your job will not be negatively affected by the hit on the economy from this correction.

But I’m sure ol’ Helicopter Boy will keep flushing the toilet on the dollar to get through this.

[Arraya]

The people making the plan don’t care. They will be long gone in 5 years. In the mean time it makes a select few suckers debt slaves to a bad investment just long enough for the investors to minimize their liabilities in the short term and get out of town.

[Arraya]

The people making the plan don’t care. They will be long gone in 5 years. In the mean time it makes a select few suckers debt slaves to a bad investment just long enough for the investors to minimize their liabilities in the short term and get out of town.

[Arraya]

The people making the plan don’t care. They will be long gone in 5 years. In the mean time it makes a select few suckers debt slaves to a bad investment just long enough for the investors to minimize their liabilities in the short term and get out of town.

[Arraya]

The people making the plan don’t care. They will be long gone in 5 years. In the mean time it makes a select few suckers debt slaves to a bad investment just long enough for the investors to minimize their liabilities in the short term and get out of town.

[Author]

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