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Old 09-18-2009, 10:49 AM
 
975 posts, read 1,603,784 times
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Quote:
Originally Posted by evilnewbie View Post
How would you invest knowing the impending explosion of the option mortgages? Is there a hedge to protect yourself against the ticking bomb?
Sorry Bud, but if you haven't already postioned yourself for the impending doom you're pretty much screwed for the rest of your life I would imagine.
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Old 09-20-2009, 07:50 AM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,807,465 times
Reputation: 1708
Default Low expectations for new loan help program

Low expectations for new loan help program - Yahoo! News (http://news.yahoo.com/s/ap/20090919/ap_on_bi_ge/us_government_loans_mortgage_help - broken link)

http://news.yahoo.com/s/ap/20090918/ap_on_re_us/us_federal_housing_administration (broken link)
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Old 09-20-2009, 08:04 AM
 
12,869 posts, read 13,436,712 times
Reputation: 4453
what an interesting article! that is outrageous.

government is paying the banks to modify the loans. so now government is giving banks incentives for loan modification? the government should have stayed out of this mess in the first place and let the bad lenders take the hits, but the hits just keep coming.

For each loan modification, the government will pay the lender up to $1,250. If 45,000 people sign up, that works out to around $56 million in costs. But HUD estimates the program will ultimately save $370 million in losses from avoided foreclosures.

this is also an eyeball popping statistic:
But there's a catch: Borrowers who spend more than 55 percent of their total pretax income on any recurring monthly debts including home and car loans and credit card debt are out of luck. Officials say the risk that these debt-burdened homeowners will fall behind again is simply too high.
Around 16 million homeowners, or about a third of the 51 million Americans with a mortgage, have a debt load that high, according to Moody's Economy.com.

so any change in interest rates, cost of living / inflation, is going to severely impact this large group of "consumers", not to mention the group of "consumers" who are experiencing or about to experience unemployment stressors.
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Old 09-20-2009, 10:59 AM
 
Location: Seattle
1,368 posts, read 2,992,369 times
Reputation: 1476
Option ARMs and ALT-A is real estate bust #2. FHA going bust is real estate bust #3.

This isn't ending any time soon.
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Old 09-20-2009, 12:43 PM
 
1,369 posts, read 2,039,584 times
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Quote:
Originally Posted by drshang View Post
Option ARMs and ALT-A is real estate bust #2. FHA going bust is real estate bust #3.

This isn't ending any time soon.
Agreed.

The light at the end of the tunnel........is the train
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Old 09-20-2009, 03:30 PM
 
Location: Weston Florida
84 posts, read 291,709 times
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Question, how many people actually have option arms and remain in the house? Have they all not already defaulted and been foreclosed?

You would assume if values fell by 50% and their ARM is about to be reset then they would have just ran for the hills...

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Old 09-20-2009, 04:31 PM
 
5,090 posts, read 10,043,741 times
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Quote:
Originally Posted by triplenet View Post
Question, how many people actually have option arms and remain in the house? Have they all not already defaulted and been foreclosed?

You would assume if values fell by 50% and their ARM is about to be reset then they would have just ran for the hills...

From what I follow the common practice is stay on for 6 months to a year paying NOTHING.

Sort of a final F.U. to the bank, as it were.
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Old 09-20-2009, 05:13 PM
 
Location: Seattle
1,368 posts, read 2,992,369 times
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Quote:
Originally Posted by Philip T View Post
From what I follow the common practice is stay on for 6 months to a year paying NOTHING.

Sort of a final F.U. to the bank, as it were.
This is one of the core problems. More and more people are finding out that you can stop paying on the mortgage and live rent free for a year or longer without any consequences. This is WAY smarter than liquidating retirement accounts or running up credit card debt in order to pay a mortgage. There are NO criminal liabilities to not paying on your mortgage. Your credit score will suck for a couple of years, but so what? The problem is even if you do a short sale your credit score will still take a hit. Would you rather have a low credit score with an extra 30-60k in the bank or not?

The fact of the matter is it's a smart business decision for many people to stop paying the mortgage instead of working it out with the bank or doing a short sale. Banks refusing to kick people out because they want to hold their inventory longer is only going to cause more people to stop paying. Their greed is hitting them again. They should be taking the losses properly instead of drawing them out for years. It will cause a cycle of new people not paying on their house.
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Old 09-21-2009, 06:41 AM
 
706 posts, read 1,187,523 times
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kind of a rule of thumb 3x your income should be housing. If median wage is 45K it looks like median should be 135K vs current 165K. Looks like another 15-20% to go.
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Old 09-21-2009, 12:21 PM
 
Location: Castle Hills
1,133 posts, read 2,379,897 times
Reputation: 611
Quote:
Originally Posted by drshang View Post
This is one of the core problems. More and more people are finding out that you can stop paying on the mortgage and live rent free for a year or longer without any consequences. This is WAY smarter than liquidating retirement accounts or running up credit card debt in order to pay a mortgage. There are NO criminal liabilities to not paying on your mortgage. Your credit score will suck for a couple of years, but so what? The problem is even if you do a short sale your credit score will still take a hit. Would you rather have a low credit score with an extra 30-60k in the bank or not?

The fact of the matter is it's a smart business decision for many people to stop paying the mortgage instead of working it out with the bank or doing a short sale. Banks refusing to kick people out because they want to hold their inventory longer is only going to cause more people to stop paying. Their greed is hitting them again. They should be taking the losses properly instead of drawing them out for years. It will cause a cycle of new people not paying on their house.
You are exactly right. I've seen many people do this and they get away with it 100%. I don't think I could do that and sleep at night.
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