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

[jpinpb]

That is a very good point. I figured they would continually trinkle in over time.

What I would mostly like to know is what percentage of homes in San Diego were bought w/subprime loans for each year from, say, 2002 to 2006. That will give an idea what we’re in for here. Some people were saying only 10-15%. I can’t accept that. I’m thinking closer to 80%. I read, maybe on Pig. that some people who owned their place for years, had equity and did HELC w/subprime loans. Crazy.

I also think no one is saying anything because they’re in denial. But also they are very shortsighted. They were extremely shortsighted and in denial during the boom. Houses were going to keep going up to infinity, remember? Two-three years ago I was hounded by lenders, friends, etc to buy and I thought, “Are you crazed?” I’m surprised it went as long as it did.

The same shortsightedness will happen w/these loans adjusting. They’re just going to worry about today. It will be too overwhelming to think about the next few years. But as I said in a previous post, the interest rate reduction must be helping w/some of those loans resetting. Their rate might not go so high. Not sure. Some people who aren’t upside-down can refinance into a fixed.

Maybe it won’t be so bad.

[Bugs]

It was my understanding that San Diego had a much larger than average share of these types of ARMs.

Coming after the results of the current wave, which is only now peaking, I think the results of the second wave will really grind the market psychology down. It’s the knockout blow of the one-two combination.

On the flip side, after a bad spell that lasts this long, the rebound could be stronger than the conventional wisdom would otherwise indicate. That wisdom consisting of “everybody learned their lesson and won’t make that mistake again”. Beware of that one – I thought that way after the bust of the 1990s and I was exponentially wrong.

[Bugs]

It was my understanding that San Diego had a much larger than average share of these types of ARMs.

Coming after the results of the current wave, which is only now peaking, I think the results of the second wave will really grind the market psychology down. It’s the knockout blow of the one-two combination.

On the flip side, after a bad spell that lasts this long, the rebound could be stronger than the conventional wisdom would otherwise indicate. That wisdom consisting of “everybody learned their lesson and won’t make that mistake again”. Beware of that one – I thought that way after the bust of the 1990s and I was exponentially wrong.

[Bugs]

It was my understanding that San Diego had a much larger than average share of these types of ARMs.

Coming after the results of the current wave, which is only now peaking, I think the results of the second wave will really grind the market psychology down. It’s the knockout blow of the one-two combination.

On the flip side, after a bad spell that lasts this long, the rebound could be stronger than the conventional wisdom would otherwise indicate. That wisdom consisting of “everybody learned their lesson and won’t make that mistake again”. Beware of that one – I thought that way after the bust of the 1990s and I was exponentially wrong.

[Bugs]

It was my understanding that San Diego had a much larger than average share of these types of ARMs.

Coming after the results of the current wave, which is only now peaking, I think the results of the second wave will really grind the market psychology down. It’s the knockout blow of the one-two combination.

On the flip side, after a bad spell that lasts this long, the rebound could be stronger than the conventional wisdom would otherwise indicate. That wisdom consisting of “everybody learned their lesson and won’t make that mistake again”. Beware of that one – I thought that way after the bust of the 1990s and I was exponentially wrong.

[Bugs]

It was my understanding that San Diego had a much larger than average share of these types of ARMs.

Coming after the results of the current wave, which is only now peaking, I think the results of the second wave will really grind the market psychology down. It’s the knockout blow of the one-two combination.

On the flip side, after a bad spell that lasts this long, the rebound could be stronger than the conventional wisdom would otherwise indicate. That wisdom consisting of “everybody learned their lesson and won’t make that mistake again”. Beware of that one – I thought that way after the bust of the 1990s and I was exponentially wrong.

[orthofrancis]

These loans are doing horribly – something like 90%!!(yes – I was shocked to see that) of the loans are only having minimum payments made, thus acquiring negative amortization. These loans are then expected to default EARLIER than the CreditSuisse table above.

So – no capital investment in a house = smarter to walk away. The former “owners” were really only renting the house, and they have no equity in it. This is going to be really bad here in California, where 50% of the jumbo loans are made.

I expect future bank behavior will require a minimum 20-30% down for future loans, to prevent such behavior happening again. An investment will tie the owner into the house (I worked hard for it – I don’t want to lose it), making them them much less likely to walk away.

[orthofrancis]

These loans are doing horribly – something like 90%!!(yes – I was shocked to see that) of the loans are only having minimum payments made, thus acquiring negative amortization. These loans are then expected to default EARLIER than the CreditSuisse table above.

So – no capital investment in a house = smarter to walk away. The former “owners” were really only renting the house, and they have no equity in it. This is going to be really bad here in California, where 50% of the jumbo loans are made.

I expect future bank behavior will require a minimum 20-30% down for future loans, to prevent such behavior happening again. An investment will tie the owner into the house (I worked hard for it – I don’t want to lose it), making them them much less likely to walk away.

[orthofrancis]

These loans are doing horribly – something like 90%!!(yes – I was shocked to see that) of the loans are only having minimum payments made, thus acquiring negative amortization. These loans are then expected to default EARLIER than the CreditSuisse table above.

So – no capital investment in a house = smarter to walk away. The former “owners” were really only renting the house, and they have no equity in it. This is going to be really bad here in California, where 50% of the jumbo loans are made.

I expect future bank behavior will require a minimum 20-30% down for future loans, to prevent such behavior happening again. An investment will tie the owner into the house (I worked hard for it – I don’t want to lose it), making them them much less likely to walk away.

[orthofrancis]

These loans are doing horribly – something like 90%!!(yes – I was shocked to see that) of the loans are only having minimum payments made, thus acquiring negative amortization. These loans are then expected to default EARLIER than the CreditSuisse table above.

So – no capital investment in a house = smarter to walk away. The former “owners” were really only renting the house, and they have no equity in it. This is going to be really bad here in California, where 50% of the jumbo loans are made.

I expect future bank behavior will require a minimum 20-30% down for future loans, to prevent such behavior happening again. An investment will tie the owner into the house (I worked hard for it – I don’t want to lose it), making them them much less likely to walk away.

[orthofrancis]

These loans are doing horribly – something like 90%!!(yes – I was shocked to see that) of the loans are only having minimum payments made, thus acquiring negative amortization. These loans are then expected to default EARLIER than the CreditSuisse table above.

So – no capital investment in a house = smarter to walk away. The former “owners” were really only renting the house, and they have no equity in it. This is going to be really bad here in California, where 50% of the jumbo loans are made.

I expect future bank behavior will require a minimum 20-30% down for future loans, to prevent such behavior happening again. An investment will tie the owner into the house (I worked hard for it – I don’t want to lose it), making them them much less likely to walk away.

[4plexowner]

the only way to rescue the Option ARMs is for the govt to provide mortgage debt forgiveness to the FBs holding these toxic loans

here’s an example: FB buys a low-quality tract home for $780K and finances almost 100% of the price – current market value in a forced sale is $599K or so – the monthly payment after the OptionARM resets will double or triple – there are no conventional mortgage products available to help this FB at reset time unless he has $180K available to buy down the mortgage

the govt rescue comes by offering the FB $180K in debt forgiveness and a low interest rate mortgage for $600K – the banks currently holding the mortgage(s) are made whole and the national debt grows by $180K – the FB continues to be a wage-slave chained to a house and everyone is happy (as long as they remain asleep)

~

that would be the rescue plan that politicians and the banking cartel would like to facilitate but there’s a catch (isn’t there always?) – some (many? most?) of these FBs can’t afford the payment on a fixed-rate, fully amortized mortgage even at a below market rate – that is why these people took an OptionARM in the first place!!!

we have to understand that these are people who should NEVER, EVER been allowed to ‘purchase’ residential real estate and they don’t have a chance in hell of retaining ‘ownership’ of these properties long term – providing the FBs handouts from the taxpayer’s pocketbook will only prolong the misery – the result will be the same: short of the taxpayer giving these properties to the FBs, they will end up as NODs, NOTs, foreclosures, REOs, etc until they reach a price where the mortgage can be supported by local rents/wages

the ‘investor’ is another category of OptionARM holder – this person is also going to walk away from their property and mortgage when it resets because they can’t afford the monthly payments that their ‘investment’ will require – the only way they will continue to pay on the property long-term is if the mortgage can be supported by the rents – without some kind of mortgage debt relief there is very little incentive for this ‘investor’ to continue supporting an upside-down property with negative cashflow

~

we have discussed the ARM reset chart several times – search the archives on ‘arm reset chart’ and ‘credit suisse’ and you will find them

[4plexowner]

the only way to rescue the Option ARMs is for the govt to provide mortgage debt forgiveness to the FBs holding these toxic loans

here’s an example: FB buys a low-quality tract home for $780K and finances almost 100% of the price – current market value in a forced sale is $599K or so – the monthly payment after the OptionARM resets will double or triple – there are no conventional mortgage products available to help this FB at reset time unless he has $180K available to buy down the mortgage

the govt rescue comes by offering the FB $180K in debt forgiveness and a low interest rate mortgage for $600K – the banks currently holding the mortgage(s) are made whole and the national debt grows by $180K – the FB continues to be a wage-slave chained to a house and everyone is happy (as long as they remain asleep)

~

that would be the rescue plan that politicians and the banking cartel would like to facilitate but there’s a catch (isn’t there always?) – some (many? most?) of these FBs can’t afford the payment on a fixed-rate, fully amortized mortgage even at a below market rate – that is why these people took an OptionARM in the first place!!!

we have to understand that these are people who should NEVER, EVER been allowed to ‘purchase’ residential real estate and they don’t have a chance in hell of retaining ‘ownership’ of these properties long term – providing the FBs handouts from the taxpayer’s pocketbook will only prolong the misery – the result will be the same: short of the taxpayer giving these properties to the FBs, they will end up as NODs, NOTs, foreclosures, REOs, etc until they reach a price where the mortgage can be supported by local rents/wages

the ‘investor’ is another category of OptionARM holder – this person is also going to walk away from their property and mortgage when it resets because they can’t afford the monthly payments that their ‘investment’ will require – the only way they will continue to pay on the property long-term is if the mortgage can be supported by the rents – without some kind of mortgage debt relief there is very little incentive for this ‘investor’ to continue supporting an upside-down property with negative cashflow

~

we have discussed the ARM reset chart several times – search the archives on ‘arm reset chart’ and ‘credit suisse’ and you will find them

[4plexowner]

the only way to rescue the Option ARMs is for the govt to provide mortgage debt forgiveness to the FBs holding these toxic loans

here’s an example: FB buys a low-quality tract home for $780K and finances almost 100% of the price – current market value in a forced sale is $599K or so – the monthly payment after the OptionARM resets will double or triple – there are no conventional mortgage products available to help this FB at reset time unless he has $180K available to buy down the mortgage

the govt rescue comes by offering the FB $180K in debt forgiveness and a low interest rate mortgage for $600K – the banks currently holding the mortgage(s) are made whole and the national debt grows by $180K – the FB continues to be a wage-slave chained to a house and everyone is happy (as long as they remain asleep)

~

that would be the rescue plan that politicians and the banking cartel would like to facilitate but there’s a catch (isn’t there always?) – some (many? most?) of these FBs can’t afford the payment on a fixed-rate, fully amortized mortgage even at a below market rate – that is why these people took an OptionARM in the first place!!!

we have to understand that these are people who should NEVER, EVER been allowed to ‘purchase’ residential real estate and they don’t have a chance in hell of retaining ‘ownership’ of these properties long term – providing the FBs handouts from the taxpayer’s pocketbook will only prolong the misery – the result will be the same: short of the taxpayer giving these properties to the FBs, they will end up as NODs, NOTs, foreclosures, REOs, etc until they reach a price where the mortgage can be supported by local rents/wages

the ‘investor’ is another category of OptionARM holder – this person is also going to walk away from their property and mortgage when it resets because they can’t afford the monthly payments that their ‘investment’ will require – the only way they will continue to pay on the property long-term is if the mortgage can be supported by the rents – without some kind of mortgage debt relief there is very little incentive for this ‘investor’ to continue supporting an upside-down property with negative cashflow

~

we have discussed the ARM reset chart several times – search the archives on ‘arm reset chart’ and ‘credit suisse’ and you will find them

[4plexowner]

the only way to rescue the Option ARMs is for the govt to provide mortgage debt forgiveness to the FBs holding these toxic loans

here’s an example: FB buys a low-quality tract home for $780K and finances almost 100% of the price – current market value in a forced sale is $599K or so – the monthly payment after the OptionARM resets will double or triple – there are no conventional mortgage products available to help this FB at reset time unless he has $180K available to buy down the mortgage

the govt rescue comes by offering the FB $180K in debt forgiveness and a low interest rate mortgage for $600K – the banks currently holding the mortgage(s) are made whole and the national debt grows by $180K – the FB continues to be a wage-slave chained to a house and everyone is happy (as long as they remain asleep)

~

that would be the rescue plan that politicians and the banking cartel would like to facilitate but there’s a catch (isn’t there always?) – some (many? most?) of these FBs can’t afford the payment on a fixed-rate, fully amortized mortgage even at a below market rate – that is why these people took an OptionARM in the first place!!!

we have to understand that these are people who should NEVER, EVER been allowed to ‘purchase’ residential real estate and they don’t have a chance in hell of retaining ‘ownership’ of these properties long term – providing the FBs handouts from the taxpayer’s pocketbook will only prolong the misery – the result will be the same: short of the taxpayer giving these properties to the FBs, they will end up as NODs, NOTs, foreclosures, REOs, etc until they reach a price where the mortgage can be supported by local rents/wages

the ‘investor’ is another category of OptionARM holder – this person is also going to walk away from their property and mortgage when it resets because they can’t afford the monthly payments that their ‘investment’ will require – the only way they will continue to pay on the property long-term is if the mortgage can be supported by the rents – without some kind of mortgage debt relief there is very little incentive for this ‘investor’ to continue supporting an upside-down property with negative cashflow

~

we have discussed the ARM reset chart several times – search the archives on ‘arm reset chart’ and ‘credit suisse’ and you will find them

[Author]

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