[DaCounselor]

“I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment.
________________________

Only if they sold!
________________________

Nope. Most people who are still holding an ’01 purchase are still way up. Like I said in my earlier post, they could probably discount their property today to sell it fast and still be way up. There is really no way around the fact that someone who called the top in ’01 and therefore decided not to buy then has missed out on making a large pile of money.

[DaCounselor]

“I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment.
________________________

Only if they sold!
________________________

Nope. Most people who are still holding an ’01 purchase are still way up. Like I said in my earlier post, they could probably discount their property today to sell it fast and still be way up. There is really no way around the fact that someone who called the top in ’01 and therefore decided not to buy then has missed out on making a large pile of money.

[DaCounselor]

“I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment.
________________________

Only if they sold!
________________________

Nope. Most people who are still holding an ’01 purchase are still way up. Like I said in my earlier post, they could probably discount their property today to sell it fast and still be way up. There is really no way around the fact that someone who called the top in ’01 and therefore decided not to buy then has missed out on making a large pile of money.

[DaCounselor]

“I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment.
________________________

Only if they sold!
________________________

Nope. Most people who are still holding an ’01 purchase are still way up. Like I said in my earlier post, they could probably discount their property today to sell it fast and still be way up. There is really no way around the fact that someone who called the top in ’01 and therefore decided not to buy then has missed out on making a large pile of money.

[DaCounselor]

I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment. Even after the devaluation we have seen so far. Yes there are some exceptionally bad areas that have been crushed but there are alot of areas in SD where values are still way up over ’01 numbers. Owners could probably discount their properties for a quicker sale and still end up with a very nice profit. Tax-free if they’re living there.

[DaCounselor]

I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment. Even after the devaluation we have seen so far. Yes there are some exceptionally bad areas that have been crushed but there are alot of areas in SD where values are still way up over ’01 numbers. Owners could probably discount their properties for a quicker sale and still end up with a very nice profit. Tax-free if they’re living there.

[DaCounselor]

I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment. Even after the devaluation we have seen so far. Yes there are some exceptionally bad areas that have been crushed but there are alot of areas in SD where values are still way up over ’01 numbers. Owners could probably discount their properties for a quicker sale and still end up with a very nice profit. Tax-free if they’re living there.

[DaCounselor]

I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment. Even after the devaluation we have seen so far. Yes there are some exceptionally bad areas that have been crushed but there are alot of areas in SD where values are still way up over ’01 numbers. Owners could probably discount their properties for a quicker sale and still end up with a very nice profit. Tax-free if they’re living there.

[DaCounselor]

I’m from the “being early is being wrong” school. Instead of calling a top in ’01, anyone who bought then is likely to still have a tremendous return on their investment. Even after the devaluation we have seen so far. Yes there are some exceptionally bad areas that have been crushed but there are alot of areas in SD where values are still way up over ’01 numbers. Owners could probably discount their properties for a quicker sale and still end up with a very nice profit. Tax-free if they’re living there.

[DaCounselor]

I think that the reference to a “second wave” of defaults is a bit misleading to the extent that there are numerous and distinct waves heading our way. The option-ARM wave is its own animal, and absent mass modifications it is going to hit and it will hurt.

The Alt-A/Prime loans will generate numerous waves, categorized by the loan terms. There are loans that upon reset will immediately become unaffordable and will go into default – that’s one wave. As FSD addresses above, we have already seen ’04/’05 vintage 3/1 ARMS reset with negligible impact on payments and thus minimal defaults. It should be noted that many 3/1 and 5/1 loans in SoCal do not go to P&I on the reset but have a longer (often 10 yr) IO period, which keeps payments lower.

However, it seems likely that the loan indices (LIBOR et al.) will eventually rise and thus cause payments to rise. This will likely take several years to play out. Due a rise in the indices (and possibly coupled with income reduction due to a weak economy) will we see another, later wave of defaults due again to inability to service the loan. So there will be successive waves generated by inability.

There is also an entirely separate category of potential defaults where ability is not an issue. These are the “business decision” waves that will be generated by borrowers with ability who decide to ruthlessly default because they are hundreds of thousands of dollars upside down and they can rent or buy a similar home for 1/2 of their present monthly outlay. The bigger the spread between servicing the current property and servicing a rental/new property, the more likely the ruthless default.

As to “bailouts”, I will restate the obvious which is that the recent housing bill is only the beginning.

[DaCounselor]

I think that the reference to a “second wave” of defaults is a bit misleading to the extent that there are numerous and distinct waves heading our way. The option-ARM wave is its own animal, and absent mass modifications it is going to hit and it will hurt.

The Alt-A/Prime loans will generate numerous waves, categorized by the loan terms. There are loans that upon reset will immediately become unaffordable and will go into default – that’s one wave. As FSD addresses above, we have already seen ’04/’05 vintage 3/1 ARMS reset with negligible impact on payments and thus minimal defaults. It should be noted that many 3/1 and 5/1 loans in SoCal do not go to P&I on the reset but have a longer (often 10 yr) IO period, which keeps payments lower.

However, it seems likely that the loan indices (LIBOR et al.) will eventually rise and thus cause payments to rise. This will likely take several years to play out. Due a rise in the indices (and possibly coupled with income reduction due to a weak economy) will we see another, later wave of defaults due again to inability to service the loan. So there will be successive waves generated by inability.

There is also an entirely separate category of potential defaults where ability is not an issue. These are the “business decision” waves that will be generated by borrowers with ability who decide to ruthlessly default because they are hundreds of thousands of dollars upside down and they can rent or buy a similar home for 1/2 of their present monthly outlay. The bigger the spread between servicing the current property and servicing a rental/new property, the more likely the ruthless default.

As to “bailouts”, I will restate the obvious which is that the recent housing bill is only the beginning.

[DaCounselor]

I think that the reference to a “second wave” of defaults is a bit misleading to the extent that there are numerous and distinct waves heading our way. The option-ARM wave is its own animal, and absent mass modifications it is going to hit and it will hurt.

The Alt-A/Prime loans will generate numerous waves, categorized by the loan terms. There are loans that upon reset will immediately become unaffordable and will go into default – that’s one wave. As FSD addresses above, we have already seen ’04/’05 vintage 3/1 ARMS reset with negligible impact on payments and thus minimal defaults. It should be noted that many 3/1 and 5/1 loans in SoCal do not go to P&I on the reset but have a longer (often 10 yr) IO period, which keeps payments lower.

However, it seems likely that the loan indices (LIBOR et al.) will eventually rise and thus cause payments to rise. This will likely take several years to play out. Due a rise in the indices (and possibly coupled with income reduction due to a weak economy) will we see another, later wave of defaults due again to inability to service the loan. So there will be successive waves generated by inability.

There is also an entirely separate category of potential defaults where ability is not an issue. These are the “business decision” waves that will be generated by borrowers with ability who decide to ruthlessly default because they are hundreds of thousands of dollars upside down and they can rent or buy a similar home for 1/2 of their present monthly outlay. The bigger the spread between servicing the current property and servicing a rental/new property, the more likely the ruthless default.

As to “bailouts”, I will restate the obvious which is that the recent housing bill is only the beginning.

[DaCounselor]

I think that the reference to a “second wave” of defaults is a bit misleading to the extent that there are numerous and distinct waves heading our way. The option-ARM wave is its own animal, and absent mass modifications it is going to hit and it will hurt.

The Alt-A/Prime loans will generate numerous waves, categorized by the loan terms. There are loans that upon reset will immediately become unaffordable and will go into default – that’s one wave. As FSD addresses above, we have already seen ’04/’05 vintage 3/1 ARMS reset with negligible impact on payments and thus minimal defaults. It should be noted that many 3/1 and 5/1 loans in SoCal do not go to P&I on the reset but have a longer (often 10 yr) IO period, which keeps payments lower.

However, it seems likely that the loan indices (LIBOR et al.) will eventually rise and thus cause payments to rise. This will likely take several years to play out. Due a rise in the indices (and possibly coupled with income reduction due to a weak economy) will we see another, later wave of defaults due again to inability to service the loan. So there will be successive waves generated by inability.

There is also an entirely separate category of potential defaults where ability is not an issue. These are the “business decision” waves that will be generated by borrowers with ability who decide to ruthlessly default because they are hundreds of thousands of dollars upside down and they can rent or buy a similar home for 1/2 of their present monthly outlay. The bigger the spread between servicing the current property and servicing a rental/new property, the more likely the ruthless default.

As to “bailouts”, I will restate the obvious which is that the recent housing bill is only the beginning.

[DaCounselor]

I think that the reference to a “second wave” of defaults is a bit misleading to the extent that there are numerous and distinct waves heading our way. The option-ARM wave is its own animal, and absent mass modifications it is going to hit and it will hurt.

The Alt-A/Prime loans will generate numerous waves, categorized by the loan terms. There are loans that upon reset will immediately become unaffordable and will go into default – that’s one wave. As FSD addresses above, we have already seen ’04/’05 vintage 3/1 ARMS reset with negligible impact on payments and thus minimal defaults. It should be noted that many 3/1 and 5/1 loans in SoCal do not go to P&I on the reset but have a longer (often 10 yr) IO period, which keeps payments lower.

However, it seems likely that the loan indices (LIBOR et al.) will eventually rise and thus cause payments to rise. This will likely take several years to play out. Due a rise in the indices (and possibly coupled with income reduction due to a weak economy) will we see another, later wave of defaults due again to inability to service the loan. So there will be successive waves generated by inability.

There is also an entirely separate category of potential defaults where ability is not an issue. These are the “business decision” waves that will be generated by borrowers with ability who decide to ruthlessly default because they are hundreds of thousands of dollars upside down and they can rent or buy a similar home for 1/2 of their present monthly outlay. The bigger the spread between servicing the current property and servicing a rental/new property, the more likely the ruthless default.

As to “bailouts”, I will restate the obvious which is that the recent housing bill is only the beginning.

[DaCounselor]

I think you have about a .00001% chance of getting a short refi if you have ability to pay the existing payments and are in fact making the payments.

If you’re in a $1 million plus home you are probably going to see more devaluation over the next few years. I would sit tight with the low interest rate for now and then play chicken with BoA when the devaluation appears to have run its course or when your payments are about to spike. I would get comfortable with the fact that you’re probably going to have to stop payments and force BoA to choose between foreclosure or a short refi.

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