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

To: Wyätt Gwyön who wrote (35967)	7/14/2005 10:18:27 AM
From: John Vosilla	Respond to of 110194

You bring up some good points. I think the high continued appreciation rates in many markets has allowed folks to continue cash out refi's with low starter/teaser rates that start the cycle again. Say Jan 2004 as the top for loan volume on teaser loans and project out 3-5 years we are looking at 2007-2009 when the pain really starts being spread across the board. A big key besides when the payment resets to a market rate is going to be how folks react to shrinkage of equity from growing loan balances and lower values. A long but perhaps slower slide than many here are hoping for.

To: Wyätt Gwyön who wrote (35967)	7/14/2005 2:43:15 PM
From: TimbaBear	Respond to of 110194

Darfott i thought it was a "constitutional right" that borrowers can always refinance without penalty. No such right exists in the Constitution. However, in lending law, prepayment penaties can and do exist in a wide variety of products. The law states that they must be fully disclosed to the borrower before the loan can close and the borrower has to sign off on disclosures stating that they are aware that the penalty exists. A lot of HELOCs have prepayment penalties in our area. The bank will make the loan with a closing cost credit that get charged back to the client if the client closes the loan within a certain number of years. The loans made to higher risk borrowers mostly have prepayment penalties. The normal, good credit, normal documentation loans rarely have a prepayment penalty. Timba