Financial Fallout

[Anonymous]

The chart does speak for itself, but I believe the option ARM folks probably have more wherewithal to refi into something more conventional than the subprimes.

[SD Realtor]

I have been pretty unsettled about the reset charts lately. Moreso because of the current activity then anything else. I am starting to think more and more that not only will we see a robust spring in 2009, but the rest of 2008 may not decline with the gusto that I as a buyer am hoping for. I am not so sure where more pain will come from, the ALT A or the Option ARMs and to be honest I am not so sure it will matter. What will be interesting to see is that whether there will be massive writedowns or rewriting of these loans with loss of principal. In the absence of that, I think that the real pain will not be felt until the 2011/2012 timeframe. Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes. I don’t believe this will affect the depreciation that much. I guess my point is that it would not surprise me to see even more of a bounce in 09 then we saw this spring. To me that would be the true eye of the storm. Also to note this chart is a bit dated. There absolutely will be some of these loans that do get refinanced even with a loss of equity. How many? Probably not an appreciable amount.

SD Realtor

[SD Realtor]

I have been pretty unsettled about the reset charts lately. Moreso because of the current activity then anything else. I am starting to think more and more that not only will we see a robust spring in 2009, but the rest of 2008 may not decline with the gusto that I as a buyer am hoping for. I am not so sure where more pain will come from, the ALT A or the Option ARMs and to be honest I am not so sure it will matter. What will be interesting to see is that whether there will be massive writedowns or rewriting of these loans with loss of principal. In the absence of that, I think that the real pain will not be felt until the 2011/2012 timeframe. Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes. I don’t believe this will affect the depreciation that much. I guess my point is that it would not surprise me to see even more of a bounce in 09 then we saw this spring. To me that would be the true eye of the storm. Also to note this chart is a bit dated. There absolutely will be some of these loans that do get refinanced even with a loss of equity. How many? Probably not an appreciable amount.

SD Realtor

[SD Realtor]

I have been pretty unsettled about the reset charts lately. Moreso because of the current activity then anything else. I am starting to think more and more that not only will we see a robust spring in 2009, but the rest of 2008 may not decline with the gusto that I as a buyer am hoping for. I am not so sure where more pain will come from, the ALT A or the Option ARMs and to be honest I am not so sure it will matter. What will be interesting to see is that whether there will be massive writedowns or rewriting of these loans with loss of principal. In the absence of that, I think that the real pain will not be felt until the 2011/2012 timeframe. Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes. I don’t believe this will affect the depreciation that much. I guess my point is that it would not surprise me to see even more of a bounce in 09 then we saw this spring. To me that would be the true eye of the storm. Also to note this chart is a bit dated. There absolutely will be some of these loans that do get refinanced even with a loss of equity. How many? Probably not an appreciable amount.

SD Realtor

[SD Realtor]

I have been pretty unsettled about the reset charts lately. Moreso because of the current activity then anything else. I am starting to think more and more that not only will we see a robust spring in 2009, but the rest of 2008 may not decline with the gusto that I as a buyer am hoping for. I am not so sure where more pain will come from, the ALT A or the Option ARMs and to be honest I am not so sure it will matter. What will be interesting to see is that whether there will be massive writedowns or rewriting of these loans with loss of principal. In the absence of that, I think that the real pain will not be felt until the 2011/2012 timeframe. Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes. I don’t believe this will affect the depreciation that much. I guess my point is that it would not surprise me to see even more of a bounce in 09 then we saw this spring. To me that would be the true eye of the storm. Also to note this chart is a bit dated. There absolutely will be some of these loans that do get refinanced even with a loss of equity. How many? Probably not an appreciable amount.

SD Realtor

[SD Realtor]

I have been pretty unsettled about the reset charts lately. Moreso because of the current activity then anything else. I am starting to think more and more that not only will we see a robust spring in 2009, but the rest of 2008 may not decline with the gusto that I as a buyer am hoping for. I am not so sure where more pain will come from, the ALT A or the Option ARMs and to be honest I am not so sure it will matter. What will be interesting to see is that whether there will be massive writedowns or rewriting of these loans with loss of principal. In the absence of that, I think that the real pain will not be felt until the 2011/2012 timeframe. Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes. I don’t believe this will affect the depreciation that much. I guess my point is that it would not surprise me to see even more of a bounce in 09 then we saw this spring. To me that would be the true eye of the storm. Also to note this chart is a bit dated. There absolutely will be some of these loans that do get refinanced even with a loss of equity. How many? Probably not an appreciable amount.

SD Realtor

[ucodegen]

Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes.

That may be true in terms of total loan value, but you have to remember that the Option-ARMs have had time to age. All during that time, most were piling on more to the principle while the underlying asset securing the loan has dropped in value. The sub-prime happened fairly early on with respect to the drop in house prices. With Option-ARMs and Alt-A’s, the resets are occurring with the underlying asset already down 10-30% depending upon market, and with the Option-ARM, the balance of the loan may have gone up 5 to 10%

The other thing I have noticed is that when comparing a January 2007 graph with the October 2007 graph, it almost looks like some loans were refi’d into Alt-A and Option-ARMs in the intervening period of time. (look at peak values between the two graphs)

[img_assist|nid=7673|title=MortgageResets.Suisse.20070100|desc=|link=node|align=left|width=466|height=364]

[ucodegen]

Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes.

That may be true in terms of total loan value, but you have to remember that the Option-ARMs have had time to age. All during that time, most were piling on more to the principle while the underlying asset securing the loan has dropped in value. The sub-prime happened fairly early on with respect to the drop in house prices. With Option-ARMs and Alt-A’s, the resets are occurring with the underlying asset already down 10-30% depending upon market, and with the Option-ARM, the balance of the loan may have gone up 5 to 10%

The other thing I have noticed is that when comparing a January 2007 graph with the October 2007 graph, it almost looks like some loans were refi’d into Alt-A and Option-ARMs in the intervening period of time. (look at peak values between the two graphs)

[img_assist|nid=7673|title=MortgageResets.Suisse.20070100|desc=|link=node|align=left|width=466|height=364]

[ucodegen]

Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes.

That may be true in terms of total loan value, but you have to remember that the Option-ARMs have had time to age. All during that time, most were piling on more to the principle while the underlying asset securing the loan has dropped in value. The sub-prime happened fairly early on with respect to the drop in house prices. With Option-ARMs and Alt-A’s, the resets are occurring with the underlying asset already down 10-30% depending upon market, and with the Option-ARM, the balance of the loan may have gone up 5 to 10%

The other thing I have noticed is that when comparing a January 2007 graph with the October 2007 graph, it almost looks like some loans were refi’d into Alt-A and Option-ARMs in the intervening period of time. (look at peak values between the two graphs)

[img_assist|nid=7673|title=MortgageResets.Suisse.20070100|desc=|link=node|align=left|width=466|height=364]

[ucodegen]

Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes.

That may be true in terms of total loan value, but you have to remember that the Option-ARMs have had time to age. All during that time, most were piling on more to the principle while the underlying asset securing the loan has dropped in value. The sub-prime happened fairly early on with respect to the drop in house prices. With Option-ARMs and Alt-A’s, the resets are occurring with the underlying asset already down 10-30% depending upon market, and with the Option-ARM, the balance of the loan may have gone up 5 to 10%

The other thing I have noticed is that when comparing a January 2007 graph with the October 2007 graph, it almost looks like some loans were refi’d into Alt-A and Option-ARMs in the intervening period of time. (look at peak values between the two graphs)

[img_assist|nid=7673|title=MortgageResets.Suisse.20070100|desc=|link=node|align=left|width=466|height=364]

[ucodegen]

Also it should be worth noting that the sum of the ALT A and ARM totals is actually less then the sum of the Subprimes.

That may be true in terms of total loan value, but you have to remember that the Option-ARMs have had time to age. All during that time, most were piling on more to the principle while the underlying asset securing the loan has dropped in value. The sub-prime happened fairly early on with respect to the drop in house prices. With Option-ARMs and Alt-A’s, the resets are occurring with the underlying asset already down 10-30% depending upon market, and with the Option-ARM, the balance of the loan may have gone up 5 to 10%

The other thing I have noticed is that when comparing a January 2007 graph with the October 2007 graph, it almost looks like some loans were refi’d into Alt-A and Option-ARMs in the intervening period of time. (look at peak values between the two graphs)

[img_assist|nid=7673|title=MortgageResets.Suisse.20070100|desc=|link=node|align=left|width=466|height=364]

[SD Realtor]

Hi uco –

Good point on your post. Agreed with all of your points. Like I said I don’t think there is any appreciable factor that will seriously reduce the next leg down. Also again, I would like to see a reset graph that is newer then all of the January 01, 2007 snapshots. My mind keeps flip flopping… while yesterday I was thinking flatness or even some sort of perhaps rally or only small declines in the nicer areas, now I am not so sure. I think the more I think about it, the more I am not sure of anything except that this will run longer then I was initially thinking/hoping for the nicer neighborhoods. Basically the bottom will be farther out then I wanted. Now I just have to see how much risk will be unwound and in what timeframe. That is tougher.

SD Realtor

[SD Realtor]

Hi uco –

Good point on your post. Agreed with all of your points. Like I said I don’t think there is any appreciable factor that will seriously reduce the next leg down. Also again, I would like to see a reset graph that is newer then all of the January 01, 2007 snapshots. My mind keeps flip flopping… while yesterday I was thinking flatness or even some sort of perhaps rally or only small declines in the nicer areas, now I am not so sure. I think the more I think about it, the more I am not sure of anything except that this will run longer then I was initially thinking/hoping for the nicer neighborhoods. Basically the bottom will be farther out then I wanted. Now I just have to see how much risk will be unwound and in what timeframe. That is tougher.

SD Realtor

[SD Realtor]

Hi uco –

Good point on your post. Agreed with all of your points. Like I said I don’t think there is any appreciable factor that will seriously reduce the next leg down. Also again, I would like to see a reset graph that is newer then all of the January 01, 2007 snapshots. My mind keeps flip flopping… while yesterday I was thinking flatness or even some sort of perhaps rally or only small declines in the nicer areas, now I am not so sure. I think the more I think about it, the more I am not sure of anything except that this will run longer then I was initially thinking/hoping for the nicer neighborhoods. Basically the bottom will be farther out then I wanted. Now I just have to see how much risk will be unwound and in what timeframe. That is tougher.

SD Realtor

[SD Realtor]

Hi uco –

Good point on your post. Agreed with all of your points. Like I said I don’t think there is any appreciable factor that will seriously reduce the next leg down. Also again, I would like to see a reset graph that is newer then all of the January 01, 2007 snapshots. My mind keeps flip flopping… while yesterday I was thinking flatness or even some sort of perhaps rally or only small declines in the nicer areas, now I am not so sure. I think the more I think about it, the more I am not sure of anything except that this will run longer then I was initially thinking/hoping for the nicer neighborhoods. Basically the bottom will be farther out then I wanted. Now I just have to see how much risk will be unwound and in what timeframe. That is tougher.

SD Realtor

[Author]

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