ARMs and foreclosures

[Eugene]

“What if the property won’t appraise for the amount that they are trying to re-fi? ”

The article uses some sort of automatic appraisal algorithm to calculate equity. It’s not very accurate (how is it possible to buy in 2006 and have -15% or less equity by the end of 2006?) But for the kind of approximate calculations they are doing, it’s probably okay.

[HLS]

What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson

There is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.

If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)

This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.

Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.

The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.

As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.

[HLS]

What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson

There is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.

If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)

This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.

Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.

The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.

As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.

[HLS]

What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson

There is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.

If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)

This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.

Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.

The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.

As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.

[HLS]

What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson

There is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.

If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)

This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.

Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.

The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.

As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.

[HLS]

What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson

There is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.

If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)

This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.

Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.

The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.

As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.

[Eugene]

“What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson”

I’m not talking about subprime loans.

If you look at that article, on page 31 it says that 1/3 of all outstanding ARMs in San Diego County (prime and subprime) are “red rate group”, with initial interest rate below 4.0%. The question is, are all these loans neg-am, or was there anything else going on.

[Eugene]

“What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson”

I’m not talking about subprime loans.

If you look at that article, on page 31 it says that 1/3 of all outstanding ARMs in San Diego County (prime and subprime) are “red rate group”, with initial interest rate below 4.0%. The question is, are all these loans neg-am, or was there anything else going on.

[Eugene]

“What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson”

I’m not talking about subprime loans.

If you look at that article, on page 31 it says that 1/3 of all outstanding ARMs in San Diego County (prime and subprime) are “red rate group”, with initial interest rate below 4.0%. The question is, are all these loans neg-am, or was there anything else going on.

[Eugene]

“What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson”

I’m not talking about subprime loans.

If you look at that article, on page 31 it says that 1/3 of all outstanding ARMs in San Diego County (prime and subprime) are “red rate group”, with initial interest rate below 4.0%. The question is, are all these loans neg-am, or was there anything else going on.

[Eugene]

“What do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/Paulson”

I’m not talking about subprime loans.

If you look at that article, on page 31 it says that 1/3 of all outstanding ARMs in San Diego County (prime and subprime) are “red rate group”, with initial interest rate below 4.0%. The question is, are all these loans neg-am, or was there anything else going on.

[HLS]

Sorry,,
I hadn’t read the article before answering your question.

Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)

I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.

I’ll check the article later.

[HLS]

Sorry,,
I hadn’t read the article before answering your question.

Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)

I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.

I’ll check the article later.

[HLS]

Sorry,,
I hadn’t read the article before answering your question.

Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)

I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.

I’ll check the article later.

[HLS]

Sorry,,
I hadn’t read the article before answering your question.

Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)

I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.

I’ll check the article later.

[Author]

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