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

To: ild who wrote (37580)	8/2/2005 3:48:24 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

so if an 18yr old with his parents' good FICO becomes an SBUX barista, he can buy a, what, $2 million property in OC? like Sammy Sosa sez, dis country beena verry verrry good ta me!

To: ild who wrote (37580)	8/2/2005 4:21:28 PM
From: russwinter	Respond to of 110194

Are Piggy-Back Loans Pushing OC Prices Higher? thehousingbubble2.blogspot.com With Orange County, CA in the grip of a home price boom, it's worth the time of free registration for insights like this, from Jonathan Lansner. "Soaring home prices allow many Orange County buyers to put down huge sums of cash to buy a home." "But the local home market may be suffering from double vision. New data that I requested indicate a hefty number of local buyers aren't all that flush with cash." "Buyers are commonly using yet another new loan trick. They take out two mortgages at the time of purchase in so-called 'piggyback' transactions, according to DataQuick. Such double dippers averaged 38 percent of all local buyers in the 12 months ended in June, basically double the rate in 2002, DataQuick says. A decade ago, just 2 percent of O.C. home purchases went piggyback." "If you just look at first mortgages, as many folks do, Orange County's average loan-to-value ratio in the past year was a healthy 77 percent. That's the lowest level in DataQuick's 18-year database. Toss in piggybacks, however, and the countywide loan-to-value ratio soars to 86 percent. That translates to lenders requiring the smallest cushion in three years, as home prices hit unfathomable heights." "Wall Street's Credit Suisse First Boston believes that that the first mortgage in a piggyback deal is 30 percent more likely to become delinquent than non-piggybacked loans. PMI Group's report concluded that 'piggyback loans may contribute to the risk of speculative bubbles in local housing markets by qualifying borrowers for larger loans at higher (loan-to-value ratios,) thus, initially supporting a rapid rise in housing values.'" "The safety of piggyback deals has never been tested by a real-estate downturn." "Think of the other lending quirks; exotic mortgage terms, generous qualification rules and big bets on interest rates. As long as the economy stays relatively steady, as well as home prices, all these risk-takers will be rewarded. But clearly unprecedented risks are being taken, in many cases one on top of each other."