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bearishgurl.
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February 17, 2011 at 7:32 AM #668428February 17, 2011 at 7:38 AM #667292
sdrealtor
Participant+1, its never that simple or even as simple as any of the arguments laid out on this thread already. Simple explanations based upon one or a few variables work well in the laboratory or one’s mind. Not so good in the real world.
February 17, 2011 at 7:38 AM #667353Participant+1, its never that simple or even as simple as any of the arguments laid out on this thread already. Simple explanations based upon one or a few variables work well in the laboratory or one’s mind. Not so good in the real world.
February 17, 2011 at 7:38 AM #667962Participant+1, its never that simple or even as simple as any of the arguments laid out on this thread already. Simple explanations based upon one or a few variables work well in the laboratory or one’s mind. Not so good in the real world.
February 17, 2011 at 7:38 AM #668100Participant+1, its never that simple or even as simple as any of the arguments laid out on this thread already. Simple explanations based upon one or a few variables work well in the laboratory or one’s mind. Not so good in the real world.
February 17, 2011 at 7:38 AM #668443Participant+1, its never that simple or even as simple as any of the arguments laid out on this thread already. Simple explanations based upon one or a few variables work well in the laboratory or one’s mind. Not so good in the real world.
February 17, 2011 at 8:21 AM #667322scaredyclassic
ParticipantI have found almost everything in thecreal world to be more complicated than o thought.
February 17, 2011 at 8:21 AM #667383ParticipantI have found almost everything in thecreal world to be more complicated than o thought.
February 17, 2011 at 8:21 AM #667992ParticipantI have found almost everything in thecreal world to be more complicated than o thought.
February 17, 2011 at 8:21 AM #668131ParticipantI have found almost everything in thecreal world to be more complicated than o thought.
February 17, 2011 at 8:21 AM #668473ParticipantI have found almost everything in thecreal world to be more complicated than o thought.
February 17, 2011 at 8:22 AM #667327bearishgurl
Participant[quote=FormerSanDiegan]Sure, the resets of 2-year teaser rates in the sub-prime category was the initial trigger. The rest of the decline is due to “gravity.” (prices falling to levels more in line with fundamentals).
During the adjustment period (reversion to the mean) from 2007 to 2010 or so, rates declined precipitously but housing prices declined as well. Obviously the force of gravity outweighed changes in rates during that time.
The answer to the original quesiton of this thread “>1% interest SPIKE = 10% house price drop? ” is “NO.” I think we can also agree on that.[/quote]
Agree that mortgage rates and housing prices do not necessarily correlate, FSD. However, I want to add that I recently read somewhere (yahoo?) that about 450,000 of Prime and Alt-A Option ARM mortgages made nationwide between about 1988 and 2002 (with potential neg-am features) are still performing and amortizing today.
Their “neg-am feature” is only a “villain” if the borrow chose it to be. Option ARMS initially had four options for the first five years. It is only the ignorant or short-sighted borrower who “chose” Option 1 or 2 every month and ended up with a payoff over the 125% threshold where the “neg am” feature kicked in at adjustment time.
The Option ARM mortgages are not the culprit here. They were excellent loan products (previously costing $1200 to $2800 to close) and are fully assumable (to later qualifying buyers) for a $50 to $500 fee. The borrowers were the problem which caused these mortgages to explode. In CA, the current 11D rate (of the FHLBB) for these mortgages is 4.258% for borrowers with a “typical” 2.75% margin who consistently chose Option 3 (the “fully amortizing rate”).
I have had several “Option ARMS,” currently have one and always chose Option 3 for the first five years. If these mortgages were still available, I would choose one again if its features were the same as my previous loans. And I am a “prime” borrower with a FICO score over 800 who would obtensibly have “choices” in life :=]
February 17, 2011 at 8:22 AM #667388Participant[quote=FormerSanDiegan]Sure, the resets of 2-year teaser rates in the sub-prime category was the initial trigger. The rest of the decline is due to “gravity.” (prices falling to levels more in line with fundamentals).
During the adjustment period (reversion to the mean) from 2007 to 2010 or so, rates declined precipitously but housing prices declined as well. Obviously the force of gravity outweighed changes in rates during that time.
The answer to the original quesiton of this thread “>1% interest SPIKE = 10% house price drop? ” is “NO.” I think we can also agree on that.[/quote]
Agree that mortgage rates and housing prices do not necessarily correlate, FSD. However, I want to add that I recently read somewhere (yahoo?) that about 450,000 of Prime and Alt-A Option ARM mortgages made nationwide between about 1988 and 2002 (with potential neg-am features) are still performing and amortizing today.
Their “neg-am feature” is only a “villain” if the borrow chose it to be. Option ARMS initially had four options for the first five years. It is only the ignorant or short-sighted borrower who “chose” Option 1 or 2 every month and ended up with a payoff over the 125% threshold where the “neg am” feature kicked in at adjustment time.
The Option ARM mortgages are not the culprit here. They were excellent loan products (previously costing $1200 to $2800 to close) and are fully assumable (to later qualifying buyers) for a $50 to $500 fee. The borrowers were the problem which caused these mortgages to explode. In CA, the current 11D rate (of the FHLBB) for these mortgages is 4.258% for borrowers with a “typical” 2.75% margin who consistently chose Option 3 (the “fully amortizing rate”).
I have had several “Option ARMS,” currently have one and always chose Option 3 for the first five years. If these mortgages were still available, I would choose one again if its features were the same as my previous loans. And I am a “prime” borrower with a FICO score over 800 who would obtensibly have “choices” in life :=]
February 17, 2011 at 8:22 AM #667997Participant[quote=FormerSanDiegan]Sure, the resets of 2-year teaser rates in the sub-prime category was the initial trigger. The rest of the decline is due to “gravity.” (prices falling to levels more in line with fundamentals).
During the adjustment period (reversion to the mean) from 2007 to 2010 or so, rates declined precipitously but housing prices declined as well. Obviously the force of gravity outweighed changes in rates during that time.
The answer to the original quesiton of this thread “>1% interest SPIKE = 10% house price drop? ” is “NO.” I think we can also agree on that.[/quote]
Agree that mortgage rates and housing prices do not necessarily correlate, FSD. However, I want to add that I recently read somewhere (yahoo?) that about 450,000 of Prime and Alt-A Option ARM mortgages made nationwide between about 1988 and 2002 (with potential neg-am features) are still performing and amortizing today.
Their “neg-am feature” is only a “villain” if the borrow chose it to be. Option ARMS initially had four options for the first five years. It is only the ignorant or short-sighted borrower who “chose” Option 1 or 2 every month and ended up with a payoff over the 125% threshold where the “neg am” feature kicked in at adjustment time.
The Option ARM mortgages are not the culprit here. They were excellent loan products (previously costing $1200 to $2800 to close) and are fully assumable (to later qualifying buyers) for a $50 to $500 fee. The borrowers were the problem which caused these mortgages to explode. In CA, the current 11D rate (of the FHLBB) for these mortgages is 4.258% for borrowers with a “typical” 2.75% margin who consistently chose Option 3 (the “fully amortizing rate”).
I have had several “Option ARMS,” currently have one and always chose Option 3 for the first five years. If these mortgages were still available, I would choose one again if its features were the same as my previous loans. And I am a “prime” borrower with a FICO score over 800 who would obtensibly have “choices” in life :=]
February 17, 2011 at 8:22 AM #668136Participant[quote=FormerSanDiegan]Sure, the resets of 2-year teaser rates in the sub-prime category was the initial trigger. The rest of the decline is due to “gravity.” (prices falling to levels more in line with fundamentals).
During the adjustment period (reversion to the mean) from 2007 to 2010 or so, rates declined precipitously but housing prices declined as well. Obviously the force of gravity outweighed changes in rates during that time.
The answer to the original quesiton of this thread “>1% interest SPIKE = 10% house price drop? ” is “NO.” I think we can also agree on that.[/quote]
Agree that mortgage rates and housing prices do not necessarily correlate, FSD. However, I want to add that I recently read somewhere (yahoo?) that about 450,000 of Prime and Alt-A Option ARM mortgages made nationwide between about 1988 and 2002 (with potential neg-am features) are still performing and amortizing today.
Their “neg-am feature” is only a “villain” if the borrow chose it to be. Option ARMS initially had four options for the first five years. It is only the ignorant or short-sighted borrower who “chose” Option 1 or 2 every month and ended up with a payoff over the 125% threshold where the “neg am” feature kicked in at adjustment time.
The Option ARM mortgages are not the culprit here. They were excellent loan products (previously costing $1200 to $2800 to close) and are fully assumable (to later qualifying buyers) for a $50 to $500 fee. The borrowers were the problem which caused these mortgages to explode. In CA, the current 11D rate (of the FHLBB) for these mortgages is 4.258% for borrowers with a “typical” 2.75% margin who consistently chose Option 3 (the “fully amortizing rate”).
I have had several “Option ARMS,” currently have one and always chose Option 3 for the first five years. If these mortgages were still available, I would choose one again if its features were the same as my previous loans. And I am a “prime” borrower with a FICO score over 800 who would obtensibly have “choices” in life :=]
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