CNN — Rate freeze plan for ARMs gains traction. How will this affect the market if this goes thru?

[blackbox]

Ditto on first comment, but remember this is an ideal result of the plan. When have government sponsor plans ever really work out as planned? The best case result would be that the price declines slow to a reasonable rate until the historical income/home price ratio hits (Most likely over shoot). I believe San Diegos is 37.5 %.
There maybe a dead cat bounce for a bit after this plan is formally announced and spread among all the media outlets, but I really believe nothing will stop the price correction from taking place after such a huge upward price spike that lacked any fundamentals at all.

[pnilesh]

Here is the link for the rate cut. This one came in today.

http://money.cnn.com/2007/11/30/real_estate/ARM_rate_freeze/index.htm?postversion=2007113016

From the news I gathered the following:

1. Judging from other lenders’ plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates.

2. Borrowers for whom loans are unaffordable even at the initial rates would likely not qualify

3. And borrowers with enough income to pay the higher reset rates may also not qualify for a freeze. Many of these good payers, however, have the option of refinancing.

[pnilesh]

Here is the link for the rate cut. This one came in today.

http://money.cnn.com/2007/11/30/real_estate/ARM_rate_freeze/index.htm?postversion=2007113016

From the news I gathered the following:

1. Judging from other lenders’ plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates.

2. Borrowers for whom loans are unaffordable even at the initial rates would likely not qualify

3. And borrowers with enough income to pay the higher reset rates may also not qualify for a freeze. Many of these good payers, however, have the option of refinancing.

[pnilesh]

Here is the link for the rate cut. This one came in today.

http://money.cnn.com/2007/11/30/real_estate/ARM_rate_freeze/index.htm?postversion=2007113016

From the news I gathered the following:

1. Judging from other lenders’ plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates.

2. Borrowers for whom loans are unaffordable even at the initial rates would likely not qualify

3. And borrowers with enough income to pay the higher reset rates may also not qualify for a freeze. Many of these good payers, however, have the option of refinancing.

[pnilesh]

Here is the link for the rate cut. This one came in today.

http://money.cnn.com/2007/11/30/real_estate/ARM_rate_freeze/index.htm?postversion=2007113016

From the news I gathered the following:

1. Judging from other lenders’ plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates.

2. Borrowers for whom loans are unaffordable even at the initial rates would likely not qualify

3. And borrowers with enough income to pay the higher reset rates may also not qualify for a freeze. Many of these good payers, however, have the option of refinancing.

[pnilesh]

Here is the link for the rate cut. This one came in today.

http://money.cnn.com/2007/11/30/real_estate/ARM_rate_freeze/index.htm?postversion=2007113016

From the news I gathered the following:

1. Judging from other lenders’ plans, a reset freeze would be available only to those borrowers judged unable to make payments at the reset rates.

2. Borrowers for whom loans are unaffordable even at the initial rates would likely not qualify

3. And borrowers with enough income to pay the higher reset rates may also not qualify for a freeze. Many of these good payers, however, have the option of refinancing.

[bsrsharma]

One thing that may happen is, without sufficient demand for mortgage backed securities (frozen ARM = less value for MBS), mortgages will become difficult to get. Only those with a sizable down payment will be able to buy homes. That should crimp demand quite a bit causing slow erosion of home values & prices.

[bsrsharma]

One thing that may happen is, without sufficient demand for mortgage backed securities (frozen ARM = less value for MBS), mortgages will become difficult to get. Only those with a sizable down payment will be able to buy homes. That should crimp demand quite a bit causing slow erosion of home values & prices.

[bsrsharma]

One thing that may happen is, without sufficient demand for mortgage backed securities (frozen ARM = less value for MBS), mortgages will become difficult to get. Only those with a sizable down payment will be able to buy homes. That should crimp demand quite a bit causing slow erosion of home values & prices.

[bsrsharma]

One thing that may happen is, without sufficient demand for mortgage backed securities (frozen ARM = less value for MBS), mortgages will become difficult to get. Only those with a sizable down payment will be able to buy homes. That should crimp demand quite a bit causing slow erosion of home values & prices.

[bsrsharma]

One thing that may happen is, without sufficient demand for mortgage backed securities (frozen ARM = less value for MBS), mortgages will become difficult to get. Only those with a sizable down payment will be able to buy homes. That should crimp demand quite a bit causing slow erosion of home values & prices.

[HereWeGo]

That’s going to happen anyway, bsr. Locking the rates might be the best of many bad alternatives for the current investors. It’s tricky to analyze, though.

If Congress passes the recent bill that gave borrowers the ablity to sue investors, that would have a far more profound impact on the cost and availability of credit than this proposed rate freeze.

[HereWeGo]

That’s going to happen anyway, bsr. Locking the rates might be the best of many bad alternatives for the current investors. It’s tricky to analyze, though.

If Congress passes the recent bill that gave borrowers the ablity to sue investors, that would have a far more profound impact on the cost and availability of credit than this proposed rate freeze.

[HereWeGo]

That’s going to happen anyway, bsr. Locking the rates might be the best of many bad alternatives for the current investors. It’s tricky to analyze, though.

If Congress passes the recent bill that gave borrowers the ablity to sue investors, that would have a far more profound impact on the cost and availability of credit than this proposed rate freeze.

[HereWeGo]

That’s going to happen anyway, bsr. Locking the rates might be the best of many bad alternatives for the current investors. It’s tricky to analyze, though.

If Congress passes the recent bill that gave borrowers the ablity to sue investors, that would have a far more profound impact on the cost and availability of credit than this proposed rate freeze.

[Author]

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