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(former)FormerSanDiegan
Participant[quote=patb]
All the non conventional mortgages are dead meat.
it’s just a matter of time[/quote]
Define non-conventional.
If you mean anything that is an ARM (as opposed to fixed rate) you are wrong.
Until last year I had an adjustable rate loan that was interest only for 5 years on a rental property in San Diego (oooh, SCARY !).
Unfortunately, since I am conservative (from an investment point-of-view) I made the mistake of refinancing into a fixed rate loan last year at 6.25%. If I had kept my “dead meat” loan my reset would have been below 5.25%. I’m pretty sure I would have been OK paying a couple hundred per month less on my loan. In the long run I guess that’s the insurance I am paying to keep my fixed rate.
ParticipantDWCAP is on the right track.
It’s not the resets that. It’s negative equity and affordability (income versus payments) that kills.People get too hung up on the second wave of resets simply because the first wave was the trigger to the market’s downfall. That’s yesterday’s news.
ParticipantDWCAP is on the right track.
It’s not the resets that. It’s negative equity and affordability (income versus payments) that kills.People get too hung up on the second wave of resets simply because the first wave was the trigger to the market’s downfall. That’s yesterday’s news.
ParticipantDWCAP is on the right track.
It’s not the resets that. It’s negative equity and affordability (income versus payments) that kills.People get too hung up on the second wave of resets simply because the first wave was the trigger to the market’s downfall. That’s yesterday’s news.
ParticipantDWCAP is on the right track.
It’s not the resets that. It’s negative equity and affordability (income versus payments) that kills.People get too hung up on the second wave of resets simply because the first wave was the trigger to the market’s downfall. That’s yesterday’s news.
ParticipantDWCAP is on the right track.
It’s not the resets that. It’s negative equity and affordability (income versus payments) that kills.People get too hung up on the second wave of resets simply because the first wave was the trigger to the market’s downfall. That’s yesterday’s news.
Participant[quote=esmith][quote=peterb]Someone needs to go out on a limb here and call for a market bounce in early 2009!! [/quote]
OK, let me play devil’s advocate.
– Option ARM payments reset every year. Much-hyped reset charts refer to the date of final reset to fully amortizing. In reality, payments go up bit by bit (maybe 10% a year) and then jump when the principal cap is hit. For a distressed borrower who had to lie about his/her income and get an option ARM just to afford the house, every reset has a potential to overload his/her financial capacity and cause a delinquency.
– There was a study by First American Loan Performance that found that a “double-digit percentage” of all option ARMs in San Diego area were 60 days delinquent as of October 2007. What’s the delinquency rate today? No one knows for sure.
– How many option ARMs were there in San Diego to begin with? We had 22 thousand defaults in the county in 2007 and 31 thousand thus far in 2008. How many non-delinquent ARMs are left?
– Is it possible that the impending Alt-A tsunami might turn out to be a fizzle?[/quote]
The other point that folks who are afraid of the reset monster forget is to consider what the rate will be at reset.
Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
This means that these loans, if resetting today would reset at or below their original rate. Perhaps as low as 4.75% !!!
Don’t get me wrong, The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
Participant[quote=esmith][quote=peterb]Someone needs to go out on a limb here and call for a market bounce in early 2009!! [/quote]
OK, let me play devil’s advocate.
– Option ARM payments reset every year. Much-hyped reset charts refer to the date of final reset to fully amortizing. In reality, payments go up bit by bit (maybe 10% a year) and then jump when the principal cap is hit. For a distressed borrower who had to lie about his/her income and get an option ARM just to afford the house, every reset has a potential to overload his/her financial capacity and cause a delinquency.
– There was a study by First American Loan Performance that found that a “double-digit percentage” of all option ARMs in San Diego area were 60 days delinquent as of October 2007. What’s the delinquency rate today? No one knows for sure.
– How many option ARMs were there in San Diego to begin with? We had 22 thousand defaults in the county in 2007 and 31 thousand thus far in 2008. How many non-delinquent ARMs are left?
– Is it possible that the impending Alt-A tsunami might turn out to be a fizzle?[/quote]
The other point that folks who are afraid of the reset monster forget is to consider what the rate will be at reset.
Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
This means that these loans, if resetting today would reset at or below their original rate. Perhaps as low as 4.75% !!!
Don’t get me wrong, The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
Participant[quote=esmith][quote=peterb]Someone needs to go out on a limb here and call for a market bounce in early 2009!! [/quote]
OK, let me play devil’s advocate.
– Option ARM payments reset every year. Much-hyped reset charts refer to the date of final reset to fully amortizing. In reality, payments go up bit by bit (maybe 10% a year) and then jump when the principal cap is hit. For a distressed borrower who had to lie about his/her income and get an option ARM just to afford the house, every reset has a potential to overload his/her financial capacity and cause a delinquency.
– There was a study by First American Loan Performance that found that a “double-digit percentage” of all option ARMs in San Diego area were 60 days delinquent as of October 2007. What’s the delinquency rate today? No one knows for sure.
– How many option ARMs were there in San Diego to begin with? We had 22 thousand defaults in the county in 2007 and 31 thousand thus far in 2008. How many non-delinquent ARMs are left?
– Is it possible that the impending Alt-A tsunami might turn out to be a fizzle?[/quote]
The other point that folks who are afraid of the reset monster forget is to consider what the rate will be at reset.
Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
This means that these loans, if resetting today would reset at or below their original rate. Perhaps as low as 4.75% !!!
Don’t get me wrong, The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
Participant[quote=esmith][quote=peterb]Someone needs to go out on a limb here and call for a market bounce in early 2009!! [/quote]
OK, let me play devil’s advocate.
– Option ARM payments reset every year. Much-hyped reset charts refer to the date of final reset to fully amortizing. In reality, payments go up bit by bit (maybe 10% a year) and then jump when the principal cap is hit. For a distressed borrower who had to lie about his/her income and get an option ARM just to afford the house, every reset has a potential to overload his/her financial capacity and cause a delinquency.
– There was a study by First American Loan Performance that found that a “double-digit percentage” of all option ARMs in San Diego area were 60 days delinquent as of October 2007. What’s the delinquency rate today? No one knows for sure.
– How many option ARMs were there in San Diego to begin with? We had 22 thousand defaults in the county in 2007 and 31 thousand thus far in 2008. How many non-delinquent ARMs are left?
– Is it possible that the impending Alt-A tsunami might turn out to be a fizzle?[/quote]
The other point that folks who are afraid of the reset monster forget is to consider what the rate will be at reset.
Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
This means that these loans, if resetting today would reset at or below their original rate. Perhaps as low as 4.75% !!!
Don’t get me wrong, The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
Participant[quote=esmith][quote=peterb]Someone needs to go out on a limb here and call for a market bounce in early 2009!! [/quote]
OK, let me play devil’s advocate.
– Option ARM payments reset every year. Much-hyped reset charts refer to the date of final reset to fully amortizing. In reality, payments go up bit by bit (maybe 10% a year) and then jump when the principal cap is hit. For a distressed borrower who had to lie about his/her income and get an option ARM just to afford the house, every reset has a potential to overload his/her financial capacity and cause a delinquency.
– There was a study by First American Loan Performance that found that a “double-digit percentage” of all option ARMs in San Diego area were 60 days delinquent as of October 2007. What’s the delinquency rate today? No one knows for sure.
– How many option ARMs were there in San Diego to begin with? We had 22 thousand defaults in the county in 2007 and 31 thousand thus far in 2008. How many non-delinquent ARMs are left?
– Is it possible that the impending Alt-A tsunami might turn out to be a fizzle?[/quote]
The other point that folks who are afraid of the reset monster forget is to consider what the rate will be at reset.
Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
This means that these loans, if resetting today would reset at or below their original rate. Perhaps as low as 4.75% !!!
Don’t get me wrong, The option ARMs are toast already because of negative amortizaiton. The Alt-A interest only or “traditional” ARMs are not nearly as deadly.
ParticipantAT age 26, you should not worry that much where stocks will be 5 years from now.
I am in my early 40’s. When I was 26 we were just recovering from recession.
If I had put $5000 into the S&P 500 when I was 26 it would be worth over $12000 today, add another ~$2000 in dividends and that’s not a horrible rate of return. Add to that the fact that we are on the back side of a 40-50% bear market and that stocks have returned nothing over the past decade.
If this Roth money is strictly for retirement :
If I were you I would drop about $3-4k into stocks at semi-intervals over the next 4 months. (assuming you can buy with either no-load or small fee of less than $10) Buy at the end of days where we see a huge decline. Keep the other $1-2K in Money Market until next year’s contribution. Rinse and repeat until you no longer qualify to contribute to a Roth.In 20 years you will thank me.
If this Roth money is mainly for retirement, but you are considering it a place to grow money for the next 5 years for another reasons (some people do this because of provisions in the tax code e.g. to buy a house), then I wouldn’t put more than 20% into stocks.
ParticipantAT age 26, you should not worry that much where stocks will be 5 years from now.
I am in my early 40’s. When I was 26 we were just recovering from recession.
If I had put $5000 into the S&P 500 when I was 26 it would be worth over $12000 today, add another ~$2000 in dividends and that’s not a horrible rate of return. Add to that the fact that we are on the back side of a 40-50% bear market and that stocks have returned nothing over the past decade.
If this Roth money is strictly for retirement :
If I were you I would drop about $3-4k into stocks at semi-intervals over the next 4 months. (assuming you can buy with either no-load or small fee of less than $10) Buy at the end of days where we see a huge decline. Keep the other $1-2K in Money Market until next year’s contribution. Rinse and repeat until you no longer qualify to contribute to a Roth.In 20 years you will thank me.
If this Roth money is mainly for retirement, but you are considering it a place to grow money for the next 5 years for another reasons (some people do this because of provisions in the tax code e.g. to buy a house), then I wouldn’t put more than 20% into stocks.
ParticipantAT age 26, you should not worry that much where stocks will be 5 years from now.
I am in my early 40’s. When I was 26 we were just recovering from recession.
If I had put $5000 into the S&P 500 when I was 26 it would be worth over $12000 today, add another ~$2000 in dividends and that’s not a horrible rate of return. Add to that the fact that we are on the back side of a 40-50% bear market and that stocks have returned nothing over the past decade.
If this Roth money is strictly for retirement :
If I were you I would drop about $3-4k into stocks at semi-intervals over the next 4 months. (assuming you can buy with either no-load or small fee of less than $10) Buy at the end of days where we see a huge decline. Keep the other $1-2K in Money Market until next year’s contribution. Rinse and repeat until you no longer qualify to contribute to a Roth.In 20 years you will thank me.
If this Roth money is mainly for retirement, but you are considering it a place to grow money for the next 5 years for another reasons (some people do this because of provisions in the tax code e.g. to buy a house), then I wouldn’t put more than 20% into stocks.
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