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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (44098)	1/8/2006 1:46:36 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

From Imshaken on the FOOL The economy here in the Twin City Metro area is good. This is a failry diverse economy based on technology, agriculture, and a bit of manufacturing to boot. Here, the economy doesn't seem to boom as much as in some other places, but it doesn't normally fall into as deep a rut either. Since we have a duplex my wife normally monitors the rental market. She just shared an observation with me. A couple miles away there are a group of three duplexes that a couple years ago rented out for $1050 a month plus utilities. Today there's an ad in the paper for one of these units for $785 plus utilities.

To: regli who wrote (44098)	1/8/2006 2:58:14 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

anotherfuckedborrower.com I am just sick and tired of the crappy borrowers that lenders will give millions of dollars to!! Don't believe me?!?!? I was in an office today and I wrote down the highlights off of one of the flyers there. Try these on for size: This lender will do 100% stated interest only loans to 1.4 million with a 620 FICO score. They will do 90% stated interest only loans to 2.4 million with a 620 FICO score. They will do 95% stated interest only on NON-OWNER OCCUPIED housing. The thing is, I don't know who is buying these loans?!?? Who in their right mind would give somebody with a 620 fico score, a loan to 1.4 million with NO money down?!?!? The only person I think wins in a loan like this, is the loan officer/broker who makes 20-30k in fees doing the deal. See my post on leverage if you haven't already for a more in depth perspective. When I got into this business I had no idea how low the standards had gotten...or how low they would become. Maybe the people in capital markets see something I do not. I think they are 'driving' by looking through the rear view mirror. They are looking at the performance of these untested products over the past 1-5 years to determine how they should move forward. Only time will tell who is right. But from what I have seen, there is waaaaay too much debt in the hands of people that have no idea what they are doing. They barely, if at all, have the income to support their current debt levels...and will be in for a certain shock when their ARMs adjust $900 a month...or more. I leave you with one question: Out of the 1.5 trillion dollars of ARMs that are set to adjust the next 24 months, how many of those people do you think are good at math, did the math (correctly), and know what is coming their way in the name of higher payments in the near future?!?!? Even if they do know that things will adjust, I won't even ask if they have a plan for how to deal with it. Somehow, I think there will be more than a few borrowers like the one above. I really look forward to the comments on this one... SoCalMtgGuy