The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (41192)	9/9/2005 11:40:44 AM
From: Ramsey Su	Read Replies (2) of 110194

This is going to be interesting to see how it plays out. biz.yahoo.com We can use some real numbers and see what a homeowner in NO will face in a year. Say joe6pack bought this house with 10% equity now. Forebearance is not forgiveness. So a one yr forebearance is a negative amortization of 1 year's worth of payment. Using 5% as the interest rate, add property tax, insurance etc etc, that 10% equity could vanish. Now add any shortage of insurance coverage, what percentage of homes are financially under water? What incentive would joe6pak have to return to the home that is worth less than the encumberances and make payments just to make the banks whole? On the other hand, the lenders really have no choice. The last thing a lender wants to do is foreclose. Aside from political and PR incorrectness, if they foreclose, they are going to own the homes and all the liabilities. Bottomline, it is still the jr lien holders and the guarantors who are going to be killed.

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