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TheBreeze
ParticipantI actually don’t know that much about 10-Qs other than you can find them at http://www.sec.gov. As for Citibank and JPM, I would imagine that most of the big banks are diversified and won’t be hurt by the housing bubble pop as much as smaller banks like Federated who appear to have really jacked up their earnings using these risky mortgages. I also agree with you that the banks that sold their mortgages to the MBS market are going to be much better off than those (like Federated) who haven’t. It’s going to be interesting to watch how all this plays out over the next few years.
ParticipantGood question, poway. I always assumed that mortgages were only backed by the house. If that is the case, then if the owner of the house defaults on the loan, the only recourse for the holder of the loan is to foreclose and sell the house. However, in today’s market, the house is likely to sell for much less than the balance left on the loan.
It looks like the big winners here are going to be the CEOs of the companies like FED and others mentioned in the Business Week article. Because FED can book the full payment amount even when the borrower is only making the minimum payment, these option ARMs are a way for CEOs to boost short-term earnings at the expense of the long-term health of the company. This allows CEOs to cash out their stock options in the short-term leaving long-term holders of the stock holding the bag when they borrowers eventually default and the foreclosed house is worth only a fraction of the balance left on the loan.
I believe these option ARMs have enabled the housing bubble to inflate to several times the size it would have otherwise have been. Which means we’re going to see that much bigger of a pop in the near future.
ParticipantThanks for bringing this back FSD. Was this guy really trying to sell us on Amarillo by touting its “5 Wal-Marts”? LOL! If I pay $650K for a house, I don’t want a Wal-Mart anywhere near me.
ParticipantIt’s not just the ARM buyers. You also need to factor in all those folks who took out a HELOC at the top. Like this dude:
Price Reduced: 10/10/06 — $560,000 to $530,000
Price Reduced: 10/24/06 — $530,000 to $489,900
Price Reduced: 11/03/06 — $489,900 to $479,900
Price Reduced: 11/09/06 — $479,900 to $475,000
Price Reduced: 11/10/06 — $475,000 to $470,000
Price Reduced: 11/20/06 — $470,000 to $465,000According to Zillow, this condo was purchased in 2003 for $426,000, and yet somehow the owner got himself upside down.
It’s going to get ugly out there.
ParticipantStated income loans for illegal immigrants? Sounds like a winner.
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