Bloomberg has an interesting article about the subprime meltdown and the ripples it will send through the OC economy. I thought this was an interesting example of the problems people are facing:
Ankur Kumar, 27, worked in Ameriquest’s fraud-detection department from mid-2004 until last May when he lost his job as part of the company’s layoffs. In his new career as a fitness trainer, he hopes to have an income of $30,000 this year, compared with more than $40,000 when he worked at Ameriquest.
Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses. The interest rate on Kumar’s adjustable-rate mortgage is scheduled to go up in October. He plans to refinance. “I’ll probably have to do something risky, to be honest,” he said.
I wonder how many people are in this situation…depending on the income from rented rooms in their home to service an interest only loan?
Classic. This joker works in the FRAUD DETECTION DEPARTMENT at Ameriquest, yet he somehow qualified for a DTI ratio of 90% ($36K/$40K) on his interest-only toxic voodoo loan. Even if you include the (unreported to the IRS I’m sure) rental income from his roommates, the DTI is still a 45%. Must have been a NINJA (No Income, No Job or Assets) loan!
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