Home › Forums › Housing › Wells Fargo has reduced mortgage balances on 43,500 option ARM’s and counting
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jameswenn.
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November 9, 2009 at 10:32 AM #480218November 9, 2009 at 11:50 AM #479405
Nor-LA-SD-guy
Participant[quote=denverite]I sold my house in Denver and moved to Camarillo, now rent a small granny flat in the foothills on one acre. It looks like that will be home for quite some time![/quote]
Camarillo and the North L.A. area are still quite expensive, you can pay 400K easy for a place in an area you would be somewhat scared drive through.
November 9, 2009 at 11:50 AM #479575Participant[quote=denverite]I sold my house in Denver and moved to Camarillo, now rent a small granny flat in the foothills on one acre. It looks like that will be home for quite some time![/quote]
Camarillo and the North L.A. area are still quite expensive, you can pay 400K easy for a place in an area you would be somewhat scared drive through.
November 9, 2009 at 11:50 AM #479937Participant[quote=denverite]I sold my house in Denver and moved to Camarillo, now rent a small granny flat in the foothills on one acre. It looks like that will be home for quite some time![/quote]
Camarillo and the North L.A. area are still quite expensive, you can pay 400K easy for a place in an area you would be somewhat scared drive through.
November 9, 2009 at 11:50 AM #480019Participant[quote=denverite]I sold my house in Denver and moved to Camarillo, now rent a small granny flat in the foothills on one acre. It looks like that will be home for quite some time![/quote]
Camarillo and the North L.A. area are still quite expensive, you can pay 400K easy for a place in an area you would be somewhat scared drive through.
November 9, 2009 at 11:50 AM #480241Participant[quote=denverite]I sold my house in Denver and moved to Camarillo, now rent a small granny flat in the foothills on one acre. It looks like that will be home for quite some time![/quote]
Camarillo and the North L.A. area are still quite expensive, you can pay 400K easy for a place in an area you would be somewhat scared drive through.
November 9, 2009 at 1:19 PM #479415analyst
Participant[quote=ctr70]http://www.thetruthaboutmortgage.com/wells-fargo-converting-option-arms-into-interest-only-loans/
This is the link to the actually post about Wells reducing pincipal balances on option arms and converting to IO loans.[/quote]
The links provided so far (and others I have found separately) do not agree with the poster’s description.
Nowhere, so far, is the loan described as fixed-rate during any time period.
The interest-only period is described as 6-10 years, not 40.
The balance written off is probably not “principal”, but “interest accrued but not paid” (during the original negative amortization period). Wells Fargo bought the loans at a discount that covers this write-down, so is not taking any loss.
Any person offered this deal who can sell and break even should immediately take the offer and sell, which is a good (and fair) outcome for all.
For most borrowers, this deal will be a loser. It is (from the documentation so far) a garden variety variable rate mortgage with a 6-10 year interest-only period, an initial rate of less than 5% being nothing special for such a loan. In coming years the variable interest rate will adjust with the market.
Interest rate is likely to go up, which would send house values down, and a non-recourse loan may have been traded in for a recourse loan.
This is nothing more than a plan by Wells Fargo to slow down foreclosures on this portfolio of loans while maximizing cash flow received, and will appeal only to borrowers who still have a bubble mentality.
November 9, 2009 at 1:19 PM #479585Participant[quote=ctr70]http://www.thetruthaboutmortgage.com/wells-fargo-converting-option-arms-into-interest-only-loans/
This is the link to the actually post about Wells reducing pincipal balances on option arms and converting to IO loans.[/quote]
The links provided so far (and others I have found separately) do not agree with the poster’s description.
Nowhere, so far, is the loan described as fixed-rate during any time period.
The interest-only period is described as 6-10 years, not 40.
The balance written off is probably not “principal”, but “interest accrued but not paid” (during the original negative amortization period). Wells Fargo bought the loans at a discount that covers this write-down, so is not taking any loss.
Any person offered this deal who can sell and break even should immediately take the offer and sell, which is a good (and fair) outcome for all.
For most borrowers, this deal will be a loser. It is (from the documentation so far) a garden variety variable rate mortgage with a 6-10 year interest-only period, an initial rate of less than 5% being nothing special for such a loan. In coming years the variable interest rate will adjust with the market.
Interest rate is likely to go up, which would send house values down, and a non-recourse loan may have been traded in for a recourse loan.
This is nothing more than a plan by Wells Fargo to slow down foreclosures on this portfolio of loans while maximizing cash flow received, and will appeal only to borrowers who still have a bubble mentality.
November 9, 2009 at 1:19 PM #479947Participant[quote=ctr70]http://www.thetruthaboutmortgage.com/wells-fargo-converting-option-arms-into-interest-only-loans/
This is the link to the actually post about Wells reducing pincipal balances on option arms and converting to IO loans.[/quote]
The links provided so far (and others I have found separately) do not agree with the poster’s description.
Nowhere, so far, is the loan described as fixed-rate during any time period.
The interest-only period is described as 6-10 years, not 40.
The balance written off is probably not “principal”, but “interest accrued but not paid” (during the original negative amortization period). Wells Fargo bought the loans at a discount that covers this write-down, so is not taking any loss.
Any person offered this deal who can sell and break even should immediately take the offer and sell, which is a good (and fair) outcome for all.
For most borrowers, this deal will be a loser. It is (from the documentation so far) a garden variety variable rate mortgage with a 6-10 year interest-only period, an initial rate of less than 5% being nothing special for such a loan. In coming years the variable interest rate will adjust with the market.
Interest rate is likely to go up, which would send house values down, and a non-recourse loan may have been traded in for a recourse loan.
This is nothing more than a plan by Wells Fargo to slow down foreclosures on this portfolio of loans while maximizing cash flow received, and will appeal only to borrowers who still have a bubble mentality.
November 9, 2009 at 1:19 PM #480028Participant[quote=ctr70]http://www.thetruthaboutmortgage.com/wells-fargo-converting-option-arms-into-interest-only-loans/
This is the link to the actually post about Wells reducing pincipal balances on option arms and converting to IO loans.[/quote]
The links provided so far (and others I have found separately) do not agree with the poster’s description.
Nowhere, so far, is the loan described as fixed-rate during any time period.
The interest-only period is described as 6-10 years, not 40.
The balance written off is probably not “principal”, but “interest accrued but not paid” (during the original negative amortization period). Wells Fargo bought the loans at a discount that covers this write-down, so is not taking any loss.
Any person offered this deal who can sell and break even should immediately take the offer and sell, which is a good (and fair) outcome for all.
For most borrowers, this deal will be a loser. It is (from the documentation so far) a garden variety variable rate mortgage with a 6-10 year interest-only period, an initial rate of less than 5% being nothing special for such a loan. In coming years the variable interest rate will adjust with the market.
Interest rate is likely to go up, which would send house values down, and a non-recourse loan may have been traded in for a recourse loan.
This is nothing more than a plan by Wells Fargo to slow down foreclosures on this portfolio of loans while maximizing cash flow received, and will appeal only to borrowers who still have a bubble mentality.
November 9, 2009 at 1:19 PM #480251Participant[quote=ctr70]http://www.thetruthaboutmortgage.com/wells-fargo-converting-option-arms-into-interest-only-loans/
This is the link to the actually post about Wells reducing pincipal balances on option arms and converting to IO loans.[/quote]
The links provided so far (and others I have found separately) do not agree with the poster’s description.
Nowhere, so far, is the loan described as fixed-rate during any time period.
The interest-only period is described as 6-10 years, not 40.
The balance written off is probably not “principal”, but “interest accrued but not paid” (during the original negative amortization period). Wells Fargo bought the loans at a discount that covers this write-down, so is not taking any loss.
Any person offered this deal who can sell and break even should immediately take the offer and sell, which is a good (and fair) outcome for all.
For most borrowers, this deal will be a loser. It is (from the documentation so far) a garden variety variable rate mortgage with a 6-10 year interest-only period, an initial rate of less than 5% being nothing special for such a loan. In coming years the variable interest rate will adjust with the market.
Interest rate is likely to go up, which would send house values down, and a non-recourse loan may have been traded in for a recourse loan.
This is nothing more than a plan by Wells Fargo to slow down foreclosures on this portfolio of loans while maximizing cash flow received, and will appeal only to borrowers who still have a bubble mentality.
November 9, 2009 at 4:58 PM #479521Bugs
ParticipantThe Japanese tried several run-the-clock tactics and all it did was drag it all out.
I agree with Analyst – this is about the bank slowing down their rates of foreclosure – which triggers the requirements to write down the loss – and maximizing their cash flow. It’s about extracting the maximum number of payments and the maximum amounts the borrower will consider paying for as long as they’re willing to do it. Give the borrower just enough hope that they might somehow be able to survive the bust intact and be in a position to get back on the rocket for the next 300% bull run.
I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?
November 9, 2009 at 4:58 PM #479691ParticipantThe Japanese tried several run-the-clock tactics and all it did was drag it all out.
I agree with Analyst – this is about the bank slowing down their rates of foreclosure – which triggers the requirements to write down the loss – and maximizing their cash flow. It’s about extracting the maximum number of payments and the maximum amounts the borrower will consider paying for as long as they’re willing to do it. Give the borrower just enough hope that they might somehow be able to survive the bust intact and be in a position to get back on the rocket for the next 300% bull run.
I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?
November 9, 2009 at 4:58 PM #480053ParticipantThe Japanese tried several run-the-clock tactics and all it did was drag it all out.
I agree with Analyst – this is about the bank slowing down their rates of foreclosure – which triggers the requirements to write down the loss – and maximizing their cash flow. It’s about extracting the maximum number of payments and the maximum amounts the borrower will consider paying for as long as they’re willing to do it. Give the borrower just enough hope that they might somehow be able to survive the bust intact and be in a position to get back on the rocket for the next 300% bull run.
I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?
November 9, 2009 at 4:58 PM #480134ParticipantThe Japanese tried several run-the-clock tactics and all it did was drag it all out.
I agree with Analyst – this is about the bank slowing down their rates of foreclosure – which triggers the requirements to write down the loss – and maximizing their cash flow. It’s about extracting the maximum number of payments and the maximum amounts the borrower will consider paying for as long as they’re willing to do it. Give the borrower just enough hope that they might somehow be able to survive the bust intact and be in a position to get back on the rocket for the next 300% bull run.
I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?
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