[DWCAP]

FSD-
I have seen that reset chart alot. I constantly wonder how much of that is second’s, already sold, or flips; which will reduce the overall pain of resets.
I actually agree with you on the rests to the Neg Am. This in my mind is the thing that will get the CV/RSF’s, much more than subprime. The thing is, those people are also the ones with the best income growth right now. If they over extended themselves 10% or so, and have 5 years to make up for it, they will likely be ok. Add in that they will prob. be able to caugh up some money to grease the refi wheels so to speak and alot more of them will be ok. Prime borrowers are not subprime borrowers, to expect them to make or even have only the choices that a subprime does is incorrect. That doesnt mean that reset wont hurt, or that only prime borrowers bought in the nicer areas.

[DWCAP]

FSD-
I have seen that reset chart alot. I constantly wonder how much of that is second’s, already sold, or flips; which will reduce the overall pain of resets.
I actually agree with you on the rests to the Neg Am. This in my mind is the thing that will get the CV/RSF’s, much more than subprime. The thing is, those people are also the ones with the best income growth right now. If they over extended themselves 10% or so, and have 5 years to make up for it, they will likely be ok. Add in that they will prob. be able to caugh up some money to grease the refi wheels so to speak and alot more of them will be ok. Prime borrowers are not subprime borrowers, to expect them to make or even have only the choices that a subprime does is incorrect. That doesnt mean that reset wont hurt, or that only prime borrowers bought in the nicer areas.

[DWCAP]

FSD-
I have seen that reset chart alot. I constantly wonder how much of that is second’s, already sold, or flips; which will reduce the overall pain of resets.
I actually agree with you on the rests to the Neg Am. This in my mind is the thing that will get the CV/RSF’s, much more than subprime. The thing is, those people are also the ones with the best income growth right now. If they over extended themselves 10% or so, and have 5 years to make up for it, they will likely be ok. Add in that they will prob. be able to caugh up some money to grease the refi wheels so to speak and alot more of them will be ok. Prime borrowers are not subprime borrowers, to expect them to make or even have only the choices that a subprime does is incorrect. That doesnt mean that reset wont hurt, or that only prime borrowers bought in the nicer areas.

[DWCAP]

FSD-
I have seen that reset chart alot. I constantly wonder how much of that is second’s, already sold, or flips; which will reduce the overall pain of resets.
I actually agree with you on the rests to the Neg Am. This in my mind is the thing that will get the CV/RSF’s, much more than subprime. The thing is, those people are also the ones with the best income growth right now. If they over extended themselves 10% or so, and have 5 years to make up for it, they will likely be ok. Add in that they will prob. be able to caugh up some money to grease the refi wheels so to speak and alot more of them will be ok. Prime borrowers are not subprime borrowers, to expect them to make or even have only the choices that a subprime does is incorrect. That doesnt mean that reset wont hurt, or that only prime borrowers bought in the nicer areas.

[DWCAP]

FSD-
I have seen that reset chart alot. I constantly wonder how much of that is second’s, already sold, or flips; which will reduce the overall pain of resets.
I actually agree with you on the rests to the Neg Am. This in my mind is the thing that will get the CV/RSF’s, much more than subprime. The thing is, those people are also the ones with the best income growth right now. If they over extended themselves 10% or so, and have 5 years to make up for it, they will likely be ok. Add in that they will prob. be able to caugh up some money to grease the refi wheels so to speak and alot more of them will be ok. Prime borrowers are not subprime borrowers, to expect them to make or even have only the choices that a subprime does is incorrect. That doesnt mean that reset wont hurt, or that only prime borrowers bought in the nicer areas.

[DWCAP]

b33,
That is exactly what I was wondering. What were rates in 2003-2005. If I remember right, they were hitting 5-5.5% fixed. So sure, if he got a 5.75% ARM and today it goes to 5.8, who cares? But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years? Is it more likly that his inital rate was 1.75% and now it is going 5.8%? How is that any different (minus better borrower) than a 6% subprime going to 10%?

So what Joe Alt-A did was get a ARM at historical lows, and apply the difference from a fixed payment to get more house. Now his pretend payment is going up to a real payment, still at great low rates, but putting that morgage out of his affordability range. He would refinance, but the bank has dropped that product, denying him the out he was counting on, especially since he has little to no equity and likely no savings to speak of.

Barring a huge pay increase, government intervention, or someother windfall (stock options etc.) Joe Alt-A is in no better place than a “James Subprime”. He still used temporary interest rates to over extend himself on the bigger house that he could not afford with the expectation that appreciation and refinancing would save him.

Ok, so I overspoke in my post. Imagine if 50-60% of buyers in 2004 walked instead of 80%. RE would still be screwed.

[DWCAP]

b33,
That is exactly what I was wondering. What were rates in 2003-2005. If I remember right, they were hitting 5-5.5% fixed. So sure, if he got a 5.75% ARM and today it goes to 5.8, who cares? But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years? Is it more likly that his inital rate was 1.75% and now it is going 5.8%? How is that any different (minus better borrower) than a 6% subprime going to 10%?

So what Joe Alt-A did was get a ARM at historical lows, and apply the difference from a fixed payment to get more house. Now his pretend payment is going up to a real payment, still at great low rates, but putting that morgage out of his affordability range. He would refinance, but the bank has dropped that product, denying him the out he was counting on, especially since he has little to no equity and likely no savings to speak of.

Barring a huge pay increase, government intervention, or someother windfall (stock options etc.) Joe Alt-A is in no better place than a “James Subprime”. He still used temporary interest rates to over extend himself on the bigger house that he could not afford with the expectation that appreciation and refinancing would save him.

Ok, so I overspoke in my post. Imagine if 50-60% of buyers in 2004 walked instead of 80%. RE would still be screwed.

[DWCAP]

b33,
That is exactly what I was wondering. What were rates in 2003-2005. If I remember right, they were hitting 5-5.5% fixed. So sure, if he got a 5.75% ARM and today it goes to 5.8, who cares? But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years? Is it more likly that his inital rate was 1.75% and now it is going 5.8%? How is that any different (minus better borrower) than a 6% subprime going to 10%?

So what Joe Alt-A did was get a ARM at historical lows, and apply the difference from a fixed payment to get more house. Now his pretend payment is going up to a real payment, still at great low rates, but putting that morgage out of his affordability range. He would refinance, but the bank has dropped that product, denying him the out he was counting on, especially since he has little to no equity and likely no savings to speak of.

Barring a huge pay increase, government intervention, or someother windfall (stock options etc.) Joe Alt-A is in no better place than a “James Subprime”. He still used temporary interest rates to over extend himself on the bigger house that he could not afford with the expectation that appreciation and refinancing would save him.

Ok, so I overspoke in my post. Imagine if 50-60% of buyers in 2004 walked instead of 80%. RE would still be screwed.

[DWCAP]

b33,
That is exactly what I was wondering. What were rates in 2003-2005. If I remember right, they were hitting 5-5.5% fixed. So sure, if he got a 5.75% ARM and today it goes to 5.8, who cares? But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years? Is it more likly that his inital rate was 1.75% and now it is going 5.8%? How is that any different (minus better borrower) than a 6% subprime going to 10%?

So what Joe Alt-A did was get a ARM at historical lows, and apply the difference from a fixed payment to get more house. Now his pretend payment is going up to a real payment, still at great low rates, but putting that morgage out of his affordability range. He would refinance, but the bank has dropped that product, denying him the out he was counting on, especially since he has little to no equity and likely no savings to speak of.

Barring a huge pay increase, government intervention, or someother windfall (stock options etc.) Joe Alt-A is in no better place than a “James Subprime”. He still used temporary interest rates to over extend himself on the bigger house that he could not afford with the expectation that appreciation and refinancing would save him.

Ok, so I overspoke in my post. Imagine if 50-60% of buyers in 2004 walked instead of 80%. RE would still be screwed.

[DWCAP]

b33,
That is exactly what I was wondering. What were rates in 2003-2005. If I remember right, they were hitting 5-5.5% fixed. So sure, if he got a 5.75% ARM and today it goes to 5.8, who cares? But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years? Is it more likly that his inital rate was 1.75% and now it is going 5.8%? How is that any different (minus better borrower) than a 6% subprime going to 10%?

So what Joe Alt-A did was get a ARM at historical lows, and apply the difference from a fixed payment to get more house. Now his pretend payment is going up to a real payment, still at great low rates, but putting that morgage out of his affordability range. He would refinance, but the bank has dropped that product, denying him the out he was counting on, especially since he has little to no equity and likely no savings to speak of.

Barring a huge pay increase, government intervention, or someother windfall (stock options etc.) Joe Alt-A is in no better place than a “James Subprime”. He still used temporary interest rates to over extend himself on the bigger house that he could not afford with the expectation that appreciation and refinancing would save him.

Ok, so I overspoke in my post. Imagine if 50-60% of buyers in 2004 walked instead of 80%. RE would still be screwed.

[DWCAP]

One more question FSD (or anyone in the know),

How many of those adjustable rate morgages had a low teaser rate? I know that was the first thing blamed when subprime hit. So I then ask, did this same low teaser rate also happen in Joe Alt-A’s loan? Did his interest rate go from 2% to 6%? Plugging that into a payment calculator, a 400’000 loan goes from 1190 to 1920. That is a big reset, even if the new rate is actually a good rate overall. To someone who is overextended and without any real savings at all (average american savings rate is negative) $700 a month can be a killer.

[DWCAP]

One more question FSD (or anyone in the know),

How many of those adjustable rate morgages had a low teaser rate? I know that was the first thing blamed when subprime hit. So I then ask, did this same low teaser rate also happen in Joe Alt-A’s loan? Did his interest rate go from 2% to 6%? Plugging that into a payment calculator, a 400’000 loan goes from 1190 to 1920. That is a big reset, even if the new rate is actually a good rate overall. To someone who is overextended and without any real savings at all (average american savings rate is negative) $700 a month can be a killer.

[DWCAP]

One more question FSD (or anyone in the know),

How many of those adjustable rate morgages had a low teaser rate? I know that was the first thing blamed when subprime hit. So I then ask, did this same low teaser rate also happen in Joe Alt-A’s loan? Did his interest rate go from 2% to 6%? Plugging that into a payment calculator, a 400’000 loan goes from 1190 to 1920. That is a big reset, even if the new rate is actually a good rate overall. To someone who is overextended and without any real savings at all (average american savings rate is negative) $700 a month can be a killer.

[DWCAP]

One more question FSD (or anyone in the know),

How many of those adjustable rate morgages had a low teaser rate? I know that was the first thing blamed when subprime hit. So I then ask, did this same low teaser rate also happen in Joe Alt-A’s loan? Did his interest rate go from 2% to 6%? Plugging that into a payment calculator, a 400’000 loan goes from 1190 to 1920. That is a big reset, even if the new rate is actually a good rate overall. To someone who is overextended and without any real savings at all (average american savings rate is negative) $700 a month can be a killer.

[DWCAP]

One more question FSD (or anyone in the know),

How many of those adjustable rate morgages had a low teaser rate? I know that was the first thing blamed when subprime hit. So I then ask, did this same low teaser rate also happen in Joe Alt-A’s loan? Did his interest rate go from 2% to 6%? Plugging that into a payment calculator, a 400’000 loan goes from 1190 to 1920. That is a big reset, even if the new rate is actually a good rate overall. To someone who is overextended and without any real savings at all (average american savings rate is negative) $700 a month can be a killer.

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