ARM reset tables, BoA -vs- CS
That ARM reset schedule resembles this graph,
|http://blogs.ocregister.com/mortgage/resetbigchart.gif
This graph, from Bank of America analyst Robert LaCoursiere, is different from the graph that usually floats around on blogs and message boards, from the January report by Credit Suisse and the Ivy Zelman group:
|http://wallstreetexaminer.com/blogs/winter/wp-content/uploads/2007/03/reset.PNG
The BoA report shows simply enormous amounts of ARM resets during the first quarter of 2008. It has total ARM resets peaking at over $100 billion / month in Mar 08, while the CS report has total ARM resets peaking at "only" $50 billion / month at the end of this year. I do not know why the predictions are so different.
I do not have the whole BoA report (but if someone here has access to it, I would like to read it). In June the Orange County Register mortgage blog had a brief summary of the BoA report which included the above image, here:
|http://blogs.ocregister.com/mortgage/archives/2007/06/bofa_analyst_mortgage_correcti_1.html
The CS graphic breaks out non-securitized ARMs as a separate category, while the BoA graphic reports on the total of securitized and non-securitized loans. The BoA graphic is interesting because it breaks out Jumbo loans, which are probably grouped with Alt-A in the CS graphic. But BoA does not show non-agency prime ARMs (perhaps agency and non-agency prime are grouped together and labeled as agency loans). Only the CS report breaks out option ARMs as a separate category. I suppose the option Arms could be subprime, Alt-A or prime. On the graph, option ARM resets don't become important for another 2 1/2 years, but I wonder if this represents the worst case (paying the lowest possible payments would cause house-owners to hit the triggers earlier).
The entire 67 page Credit Suisse report, Mortgage Liquidity du Jour: Underestimated No More from March, is available as a PDF document on Bill Cara's site, here:
|http://www.billcara.com/CS%20Mar%2012%202007%20Mortgage%20and%20Housing.pdf
For what it's worth, a Bloomberg article prompted by the BoA report said that "LaCoursiere is the top-rated mortgage-industry analyst based on investment return from his recommendations, according to StarMine Corp." He has been at BoA since 2004. Before that he covered regional U.S. banks and, even earlier, Latin American finance.
Alan |
