questioning the option arm timebomb thesis

[Anonymous]

I think he addressed the recasts in that the loans are not neg amortizing anymore to a large degree (or at all) even at minimum teaser rate based payments because the MTA is so low. First time I ever heard that and it surprised me. I find that hard to beleive also.

Why is this hard to believe given that the MTA is under 0.5%?

Btw, Wells Fargo reports quarterly the total amount of deferred interest on the Golden West Option ARMs they inherited. Here are the numbers by quarter (cumulative, not the amount of neg am that got added that quarter):

Q1 09: 4.4 billion
Q2 09: 4.2 billion
Q3 09: 3.9 billion

The amount of deferred interest has been going down steadily. Wells mentions in the latest 10-Q that most Option ARM loans are positively amortizing at this point.

Option ARM loans will probably lead to high loan losses at banks, but I don’t think there will be any recast catastrophe unless the MTA zooms up.

[Arraya]

http://www.cnbc.com/id/34729005

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

[Arraya]

http://www.cnbc.com/id/34729005

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

[Arraya]

http://www.cnbc.com/id/34729005

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

[Arraya]

http://www.cnbc.com/id/34729005

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

[Arraya]

http://www.cnbc.com/id/34729005

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

[sd_matt]

Semi-threadjack

From one of the commentators from Dr. Housing Bubble.

January 11th, 2010 at 9:37 am

“Could it be that the Obama administration is strong-arming the banks that took bail-outs to hold on to their shadow inventory until this next election cycle has passed? If a flood of foreclosed homes go on the market right before the November elections it looks bad for the democrats….not that things don’t look bad for them already.”

Why not? Do everything to prop up this housing zombie until it is maggot filled. And hopefully the arms don’t start falling off until after November of 2010. Maybe even hold it off until the presidential election. Imagine the destruction the Repubs would inherit and get blamed for.

[sd_matt]

Semi-threadjack

From one of the commentators from Dr. Housing Bubble.

January 11th, 2010 at 9:37 am

“Could it be that the Obama administration is strong-arming the banks that took bail-outs to hold on to their shadow inventory until this next election cycle has passed? If a flood of foreclosed homes go on the market right before the November elections it looks bad for the democrats….not that things don’t look bad for them already.”

Why not? Do everything to prop up this housing zombie until it is maggot filled. And hopefully the arms don’t start falling off until after November of 2010. Maybe even hold it off until the presidential election. Imagine the destruction the Repubs would inherit and get blamed for.

[sd_matt]

Semi-threadjack

From one of the commentators from Dr. Housing Bubble.

January 11th, 2010 at 9:37 am

“Could it be that the Obama administration is strong-arming the banks that took bail-outs to hold on to their shadow inventory until this next election cycle has passed? If a flood of foreclosed homes go on the market right before the November elections it looks bad for the democrats….not that things don’t look bad for them already.”

Why not? Do everything to prop up this housing zombie until it is maggot filled. And hopefully the arms don’t start falling off until after November of 2010. Maybe even hold it off until the presidential election. Imagine the destruction the Repubs would inherit and get blamed for.

[sd_matt]

Semi-threadjack

From one of the commentators from Dr. Housing Bubble.

January 11th, 2010 at 9:37 am

“Could it be that the Obama administration is strong-arming the banks that took bail-outs to hold on to their shadow inventory until this next election cycle has passed? If a flood of foreclosed homes go on the market right before the November elections it looks bad for the democrats….not that things don’t look bad for them already.”

Why not? Do everything to prop up this housing zombie until it is maggot filled. And hopefully the arms don’t start falling off until after November of 2010. Maybe even hold it off until the presidential election. Imagine the destruction the Repubs would inherit and get blamed for.

[sd_matt]

Semi-threadjack

From one of the commentators from Dr. Housing Bubble.

January 11th, 2010 at 9:37 am

“Could it be that the Obama administration is strong-arming the banks that took bail-outs to hold on to their shadow inventory until this next election cycle has passed? If a flood of foreclosed homes go on the market right before the November elections it looks bad for the democrats….not that things don’t look bad for them already.”

Why not? Do everything to prop up this housing zombie until it is maggot filled. And hopefully the arms don’t start falling off until after November of 2010. Maybe even hold it off until the presidential election. Imagine the destruction the Repubs would inherit and get blamed for.

[Anonymous]

No doubt the administration is very concerned about managing perceptions for the next election cycle, and this is influencing their policy. So this idea makes some sense.

But like most conspiracy theories, it suffers from one key flaw: Too many people would have to keep the secret.

Could they really pull this off without someone leaking it? Not likely.

[Anonymous]

No doubt the administration is very concerned about managing perceptions for the next election cycle, and this is influencing their policy. So this idea makes some sense.

But like most conspiracy theories, it suffers from one key flaw: Too many people would have to keep the secret.

Could they really pull this off without someone leaking it? Not likely.

[Anonymous]

No doubt the administration is very concerned about managing perceptions for the next election cycle, and this is influencing their policy. So this idea makes some sense.

But like most conspiracy theories, it suffers from one key flaw: Too many people would have to keep the secret.

Could they really pull this off without someone leaking it? Not likely.

[Anonymous]

No doubt the administration is very concerned about managing perceptions for the next election cycle, and this is influencing their policy. So this idea makes some sense.

But like most conspiracy theories, it suffers from one key flaw: Too many people would have to keep the secret.

Could they really pull this off without someone leaking it? Not likely.

[Author]

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