How come no talk of the 2nd wave of mortgage resets (ie. option ARMs) in 2009-2012?!?

[Mean Reversion]

The subprime fiasco as far as headlines has already made its crescendo. According to the reset calendar, it peaked and should start to wear off over the next year. Although those homes caught in the subprime mess will gradually and continually make its way into the REO/foreclosure market due to the lag.

[img_assist|nid=6485|title=ARM Reset Calendar|desc=|link=node|align=center|width=466|height=388]

Then, around the beginning of 2009 there is a calm as there are fairly low resets. But is this the calm before the storm?

Because towards the end of 2009 and all the way until 2012, there will the deadly option ARM resets in addition to various other ARM resets.

Is everyone expecting the mortgage mess to be cleaned up by then (ie. those in option ARMS to be put in fixed instruments), so that the chart will basically be made invalid by then? Or will the sh*t hit the fan the second time around as people maintain denial even into the second wave of resets?

Why is no one talking about this?! Because if our precarious economy and housing market is not any better by then, those freaking resets, if they take place, will easily put us in a depression. And I’m usually an optimist!

[kewp]

We are all trying to figure out how to short *prime* mortgages now! Shhh….

[kewp]

We are all trying to figure out how to short *prime* mortgages now! Shhh….

[kewp]

We are all trying to figure out how to short *prime* mortgages now! Shhh….

[kewp]

We are all trying to figure out how to short *prime* mortgages now! Shhh….

[kewp]

We are all trying to figure out how to short *prime* mortgages now! Shhh….

[Bubblesitter]

Option-ARMS are the next elephant in the room that will be getting lots of press soon.

This “creative” financing scheme was once limited to higher net worth, primariliy independent business owners and consultants who had high seasonality in their incomes. It morphed during the bubble years as a widespread financing option.

They have an interesting features, if you continue to choose the lower payment option and your mortgage balance reaches a preset limit (say 5% larger than your original balance) your ARM resets early. Who reads all the fine print in these exotic mortgages and really understands them?

I bet a large # of those folks have negative equity, they will be walking away in droves.

By the way, on the ARM reset chart, what is the typical lag between ARM reset and eventual foreclosure? 6 months? By shifting this graph to the right you see that the peak of the foreclosure tidal wave is still ahead.

Bubblesitter

[Bubblesitter]

Option-ARMS are the next elephant in the room that will be getting lots of press soon.

This “creative” financing scheme was once limited to higher net worth, primariliy independent business owners and consultants who had high seasonality in their incomes. It morphed during the bubble years as a widespread financing option.

They have an interesting features, if you continue to choose the lower payment option and your mortgage balance reaches a preset limit (say 5% larger than your original balance) your ARM resets early. Who reads all the fine print in these exotic mortgages and really understands them?

I bet a large # of those folks have negative equity, they will be walking away in droves.

By the way, on the ARM reset chart, what is the typical lag between ARM reset and eventual foreclosure? 6 months? By shifting this graph to the right you see that the peak of the foreclosure tidal wave is still ahead.

Bubblesitter

[Bubblesitter]

Option-ARMS are the next elephant in the room that will be getting lots of press soon.

This “creative” financing scheme was once limited to higher net worth, primariliy independent business owners and consultants who had high seasonality in their incomes. It morphed during the bubble years as a widespread financing option.

They have an interesting features, if you continue to choose the lower payment option and your mortgage balance reaches a preset limit (say 5% larger than your original balance) your ARM resets early. Who reads all the fine print in these exotic mortgages and really understands them?

I bet a large # of those folks have negative equity, they will be walking away in droves.

By the way, on the ARM reset chart, what is the typical lag between ARM reset and eventual foreclosure? 6 months? By shifting this graph to the right you see that the peak of the foreclosure tidal wave is still ahead.

Bubblesitter

[Bubblesitter]

Option-ARMS are the next elephant in the room that will be getting lots of press soon.

This “creative” financing scheme was once limited to higher net worth, primariliy independent business owners and consultants who had high seasonality in their incomes. It morphed during the bubble years as a widespread financing option.

They have an interesting features, if you continue to choose the lower payment option and your mortgage balance reaches a preset limit (say 5% larger than your original balance) your ARM resets early. Who reads all the fine print in these exotic mortgages and really understands them?

I bet a large # of those folks have negative equity, they will be walking away in droves.

By the way, on the ARM reset chart, what is the typical lag between ARM reset and eventual foreclosure? 6 months? By shifting this graph to the right you see that the peak of the foreclosure tidal wave is still ahead.

Bubblesitter

[Bubblesitter]

Option-ARMS are the next elephant in the room that will be getting lots of press soon.

This “creative” financing scheme was once limited to higher net worth, primariliy independent business owners and consultants who had high seasonality in their incomes. It morphed during the bubble years as a widespread financing option.

They have an interesting features, if you continue to choose the lower payment option and your mortgage balance reaches a preset limit (say 5% larger than your original balance) your ARM resets early. Who reads all the fine print in these exotic mortgages and really understands them?

I bet a large # of those folks have negative equity, they will be walking away in droves.

By the way, on the ARM reset chart, what is the typical lag between ARM reset and eventual foreclosure? 6 months? By shifting this graph to the right you see that the peak of the foreclosure tidal wave is still ahead.

Bubblesitter

[kewp]

In all seriousness, you are hearing talk of the 2nd wave of mortgage resets. It’s all the ‘walk away’ talk.

Unless there is some serious cram-down action 100% of these loans are going to fail.

[kewp]

In all seriousness, you are hearing talk of the 2nd wave of mortgage resets. It’s all the ‘walk away’ talk.

Unless there is some serious cram-down action 100% of these loans are going to fail.

[kewp]

In all seriousness, you are hearing talk of the 2nd wave of mortgage resets. It’s all the ‘walk away’ talk.

Unless there is some serious cram-down action 100% of these loans are going to fail.

[kewp]

In all seriousness, you are hearing talk of the 2nd wave of mortgage resets. It’s all the ‘walk away’ talk.

Unless there is some serious cram-down action 100% of these loans are going to fail.

[Author]

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