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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Amelia Carhartt who wrote (29925)	4/3/2005 9:25:26 AM
From: redfish	Respond to of 110194

Truly mindstaggering: Thanks to her "interest-only" loan, the 911 police dispatcher was able to afford, barely, her first home. She now has a stake in California's sizzling real estate market. As her home increases in value, she plans to use some of that equity to pay down her credit cards. She can't pay down her credit cards so they loan her $200k. What a country.

To: Amelia Carhartt who wrote (29925)	4/3/2005 9:34:26 AM
From: russwinter	Respond to of 110194

My God, 48% of Calf home loans in 04 were interest only, far worse than I had imagined, quite an article! These mostly fully amortize after either three or five years, but there are also two year teaser/piggyback loans out there, primarily to the subprime market. Note that 22% of 03 Calf loans were IO. The 03, two year IO cohort will come home to roost this year, although that group has a bigger equity cushion to work with. Ild, can you pick up that graphic in the article for your charts collection?

To: Amelia Carhartt who wrote (29925)	4/3/2005 11:04:57 AM
From: zebra4o1	Read Replies (4) \| Respond to of 110194

If disaster does strike, he believes, the housing market will be propped up. "The real estate economy is too important to the country and the state," Stafford said. "Lenders don't want foreclosures. They'll introduce new loan products that will allow people to stay in their properties." Maybe this real estate agent has a point. Extraordinary measures will be taken to stave off defaults. But who is the bag holder for all these interest only mortgages? When trouble starts, will the bag holders be able to imitate Japanese/Chinese banks and pretend for years that the loans haven't defaulted?

To: Amelia Carhartt who wrote (29925)	4/3/2005 12:58:14 PM
From: Perspective	Respond to of 110194

The California Housing Finance Agency, which helps first-time home buyers, announced Friday that it too will be offering an interest-only loan. ... "We had great debates whether we should be doing this or not," said the agency's executive director, Theresa Parker. "What happens to people in five years if they can't make these larger payments?" In the end, she said, they decided not to be "paternalistic," especially since the customers wanted and needed this type of loan. Not PATERNALISTIC?!? Who has the &$#( responsibility* to ensure that the borrower is capable of REPAYING the loan, for crying out loud? The borrower or the loan officer? What ever happened to making sure the lender is covered? Gee, I guess when all loans are securitized and sold off to another bagholder, and loan volume is all that matters, you just don't give a damn. This is all going to end so badly. BC

To: Amelia Carhartt who wrote (29925)	4/3/2005 1:15:47 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

And this one too: Homeowners in Harm's Way washingtonpost.com

To: Amelia Carhartt who wrote (29925)	4/4/2005 7:54:04 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 110194

Great article, absolutely dripping with moral hazard....check out this passage: If disaster does strike, he believes, the housing market will be propped up. "The real estate economy is too important to the country and the state," Stafford said. "Lenders don't want foreclosures. They'll introduce new loan products that will allow people to stay in their properties Yes, the government and banksters will bail everyone out for their greed and stupidity....NOT! By the time that happens loan standards will be so tight that even proven, qualified buyers won't be getting interest only loans....they'll be dinosaurs.<NG>