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

To: russwinter who wrote (46409)	12/1/2005 8:55:22 PM
From: Ramsey Su	Read Replies (1) \| Respond to of 110194

Russ, I think it is logical to assume that they are looking at much better data than you and I would ever see. I think they have a bird's eye view way out into the ocean and can see exactly how many sets of recast waves are coming, how big are these waves, and at what frequency. The likelihood of a credit event is increasing each day with new data that we are seeing. Even CNBC started talking about recast. It is time for us to move on to the next phase - the remedy. By looking at the available cures, we can then estimate how severe the damages are going to be. I just spent an afternoon with a mortgage broker friend and did some role playing. Basically, I gave him each of the scenarios that someone could be facing today such as the 2-28 subprime borrower with a reset notice, a 3-1 prime borrower and everything in between. He cannot come up with any solution for me to maintain my current payment regardless of whether the underlying property has appreciated or not. Now what can the Feds do? They can obviously lower rates to accomodate once again but the consequences are too numerous. (I will let Mish discuss those in his blogs <ggggg>) Can anything be done on the fiscal side? Sure, double mortgage interest deductions? No capital gain tax? May be the end of the Katrina forebearance will mark the beginning of the end of the Greenspan Real Estate Bubble (it will be known as G.R.E.B. from this point on).

To: russwinter who wrote (46409)	12/1/2005 10:04:11 PM
From: Ramsey Su	Respond to of 110194

Here is a real example of an adjustment. These are loans that I have had with World Savings for a long time. They are ARMs with monthly interest adjustments and annual payment adjustments. The rate is 2.5% over COFI. COFI effective 11/03 thru 11/04 was 1.923%. COFI effective 11/04 thru 11/05 was 1.931%. COFI effective 11/05 thru 11/06 is 2.972%. With the notice that I just received, my payment rate went to 5.472% for 11/05-11/06 as compared to 4.431% for 11/04 thru 11/05. I am certain that notices such as these are sent out daily now, just in time for a merry christmas.