Bigger Wave of Loan Defaults Coming

[DWCAP]

I dont understand why people keep accepting these interest rates. At some point inflation has to force rates up. It wouldnt take much, going up to a 4% LIBOR.

[(former)FormerSanDiegan]

SHort term rates are low because people are willing to accept 3% on short-term treasuries instead of putting the money in stocks, real estate, commodities, corporate bonds, junk bonds, mortgage backed securities, and long-term treasuries, etc.

Which asset classes do you think people should be putting their money into ? It seems to me that in scary economic times there is plenty of demand for short-term bonds.

[(former)FormerSanDiegan]

SHort term rates are low because people are willing to accept 3% on short-term treasuries instead of putting the money in stocks, real estate, commodities, corporate bonds, junk bonds, mortgage backed securities, and long-term treasuries, etc.

Which asset classes do you think people should be putting their money into ? It seems to me that in scary economic times there is plenty of demand for short-term bonds.

[(former)FormerSanDiegan]

SHort term rates are low because people are willing to accept 3% on short-term treasuries instead of putting the money in stocks, real estate, commodities, corporate bonds, junk bonds, mortgage backed securities, and long-term treasuries, etc.

Which asset classes do you think people should be putting their money into ? It seems to me that in scary economic times there is plenty of demand for short-term bonds.

[(former)FormerSanDiegan]

SHort term rates are low because people are willing to accept 3% on short-term treasuries instead of putting the money in stocks, real estate, commodities, corporate bonds, junk bonds, mortgage backed securities, and long-term treasuries, etc.

Which asset classes do you think people should be putting their money into ? It seems to me that in scary economic times there is plenty of demand for short-term bonds.

[(former)FormerSanDiegan]

SHort term rates are low because people are willing to accept 3% on short-term treasuries instead of putting the money in stocks, real estate, commodities, corporate bonds, junk bonds, mortgage backed securities, and long-term treasuries, etc.

Which asset classes do you think people should be putting their money into ? It seems to me that in scary economic times there is plenty of demand for short-term bonds.

[LA_Renter]

” Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen. The Option ARMS are certainly toast, but the other varieties … remains to be seen.”

I agree the other varieties won’t have the same degree of problems, but I think size of the Option ARMS alone are big enough to wreak havoc on the market and this looks like it has its barrel pointed at California. Here is a post from Dr Housing Bubble in June explaining the data

http://tinyurl.com/6ocooq

___________________________________________

“-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California”

““(Businessweek 2006)Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren’t paying down their loans; they’re underpaying them up.”

___________________________________________

I don’t think this is overblown, I think this is the nail in the coffin for the higher end markets. All the preliminary data is pointing in that direction.

[LA_Renter]

” Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen. The Option ARMS are certainly toast, but the other varieties … remains to be seen.”

I agree the other varieties won’t have the same degree of problems, but I think size of the Option ARMS alone are big enough to wreak havoc on the market and this looks like it has its barrel pointed at California. Here is a post from Dr Housing Bubble in June explaining the data

http://tinyurl.com/6ocooq

___________________________________________

“-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California”

““(Businessweek 2006)Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren’t paying down their loans; they’re underpaying them up.”

___________________________________________

I don’t think this is overblown, I think this is the nail in the coffin for the higher end markets. All the preliminary data is pointing in that direction.

[LA_Renter]

” Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen. The Option ARMS are certainly toast, but the other varieties … remains to be seen.”

I agree the other varieties won’t have the same degree of problems, but I think size of the Option ARMS alone are big enough to wreak havoc on the market and this looks like it has its barrel pointed at California. Here is a post from Dr Housing Bubble in June explaining the data

http://tinyurl.com/6ocooq

___________________________________________

“-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California”

““(Businessweek 2006)Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren’t paying down their loans; they’re underpaying them up.”

___________________________________________

I don’t think this is overblown, I think this is the nail in the coffin for the higher end markets. All the preliminary data is pointing in that direction.

[LA_Renter]

” Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen. The Option ARMS are certainly toast, but the other varieties … remains to be seen.”

I agree the other varieties won’t have the same degree of problems, but I think size of the Option ARMS alone are big enough to wreak havoc on the market and this looks like it has its barrel pointed at California. Here is a post from Dr Housing Bubble in June explaining the data

http://tinyurl.com/6ocooq

___________________________________________

“-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California”

““(Businessweek 2006)Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren’t paying down their loans; they’re underpaying them up.”

___________________________________________

I don’t think this is overblown, I think this is the nail in the coffin for the higher end markets. All the preliminary data is pointing in that direction.

[LA_Renter]

” Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen. The Option ARMS are certainly toast, but the other varieties … remains to be seen.”

I agree the other varieties won’t have the same degree of problems, but I think size of the Option ARMS alone are big enough to wreak havoc on the market and this looks like it has its barrel pointed at California. Here is a post from Dr Housing Bubble in June explaining the data

http://tinyurl.com/6ocooq

___________________________________________

“-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California”

““(Businessweek 2006)Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren’t paying down their loans; they’re underpaying them up.”

___________________________________________

I don’t think this is overblown, I think this is the nail in the coffin for the higher end markets. All the preliminary data is pointing in that direction.

[DWCAP]

Perhaps I may miss understand, but isn’t alot freddie/fanny debt being bought by foreigners? Lower risk of loss of nominal dollars, but in foreign currencies, it seems alot riskier. But I dont speculate or follow currienies, so I can totally be wrong.

I guess the reality of just too much money seeking too few good investments is still reality.

[DWCAP]

Perhaps I may miss understand, but isn’t alot freddie/fanny debt being bought by foreigners? Lower risk of loss of nominal dollars, but in foreign currencies, it seems alot riskier. But I dont speculate or follow currienies, so I can totally be wrong.

I guess the reality of just too much money seeking too few good investments is still reality.

[DWCAP]

Perhaps I may miss understand, but isn’t alot freddie/fanny debt being bought by foreigners? Lower risk of loss of nominal dollars, but in foreign currencies, it seems alot riskier. But I dont speculate or follow currienies, so I can totally be wrong.

I guess the reality of just too much money seeking too few good investments is still reality.

[DWCAP]

Perhaps I may miss understand, but isn’t alot freddie/fanny debt being bought by foreigners? Lower risk of loss of nominal dollars, but in foreign currencies, it seems alot riskier. But I dont speculate or follow currienies, so I can totally be wrong.

I guess the reality of just too much money seeking too few good investments is still reality.

[Author]

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