Comments | the_recession: The Next Foreclosure Wave -- Ready For A Riding!

peristaltor in the_recession

The Next Foreclosure Wave -- Ready For A Riding!

May 04, 2009 18:44

Eschaton brings us the new wave. Looks like we are right now in the very lowest point of the trough, with a wave of potential foreclosures looming right before us.

I mean, freakin' hell, people, an over 80% increase in mortgage payments by mid '11?

mortgage backed securities, mortgage defaults, cram-downs, arms, foreclosures, mortgage rates, mortgage delinquency rates, bubbles

Comments 11

capthek May 5 2009, 02:52:42 UTC

Sure, they were 5 year arms done in 2006 and that was the peak of the housing market.

On the plus side, they are not as bad as subprime but that does not mean it will be happy times.

cieldumort May 5 2009, 04:19:50 UTC

I wouldn't be so sanguine.

We need to hope and pray that the long leading indicators are still dramatically on the rise (and, unlike still today, no longer in negative territory) when these little monsters finally reset. Otherwise, imho, these will only add to the risk of another deep recession by 2012... and so quickly on the heels of this very deep recession.. especially if the recovery is not particularly strong... that's a recipe for ugly.

Pay the Piper theheretic May 6 2009, 02:06:26 UTC

DOW 2100 is my bottom mark. That's where I think it is going, though you must adjust for inflation, so it may end up being more like a DOW 2900 or 3200 by the time the bottom hits ( ... )

Re: Pay the Piper theheretic May 6 2009, 02:09:13 UTC

1588, sorry. http://en.wikipedia.org/wiki/Spanish_armada

Thread 6

cieldumort May 5 2009, 04:28:48 UTC

Good News: Option ARM Resets DelayedThe bad news: Low home prices and high unemployment could still punish borrowers when the reset happens sometime next year ( ... )

peristaltor May 5 2009, 05:17:21 UTC

Here's a question: are the lenders avoiding these resets because the current rate is lower than the one the borrowers are currently paying? If so, wouldn't that deny the borrowers a lower payment?

Also, are these resets or recasts? I barely know the distinction myself, but the linked article suggest strongly that the difference can be significant.

cieldumort May 5 2009, 05:46:31 UTC

Lenders want to make the greatest premium on their risk legally available to them, that much I am sure of.

Not sure of the reset vs. recast.

peristaltor May 5 2009, 20:35:13 UTC

Lenders want to make the greatest premium on their risk legally available to them. . . .

Exactly. That's why I ask. Correct me if I've misinterpreted the definitions, but here's my take:

If this is a delayed recast, the interest on the loans will remain static for the time being. If, on the other hand, this is a delayed reset, it simply means the increased interest is not being collected. That interest (changed by the scheduled recasts) will then accrue and further add to the debt burden described by the loans.

The payments won't change right away, but the total amount due the lender will increase over the life of the loan. The lenders make more over time, but look like forgiving angels in the eyes of the media who don't bother asking the probing questions and conveying those results.

Bastards.

Thread 5