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

To: Ramsey Su who wrote (46039)	11/23/2005 12:20:45 PM
From: Paul Kern	Read Replies (1) \| Respond to of 110194

Are the borrowers so tapped out that ARMs are the only option? Yep. That's the only way they can afford to buy. Many people don't understand interest rates never mind yield curves. We have friends,an educated middle class couple with a good income between them who took a big cash out teaser rate ARM refi on their Manhattan condo two years ago against my advice. They pissed it away on weekends in the islands, trips to Paris, and, clothes and jewelry that they can't afford. I tried to remind them a month or two ago that their loan will reset next year at a much higher rate. All I got was the same blank stare that they had when took out the loan. They now owe more than they borrowed in a market with falling prices and will face new payments that they can't possibly afford.