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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 (53843)	2/14/2006 4:12:02 PM
From: Jack of All Trades	Respond to of 110194

Especially since thier figures of equity are from 9/2005... What % of drop in "value" have we seen in the last 4-5mths?

To: Ramsey Su who wrote (53843)	2/14/2006 9:06:19 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

This is real good data (but weak analysis), and you are exactly right on where to shift the prices, makes a huge difference. Of course he uses 09/05 (when prices were just barely rolling over, or flattening)for his pricing, and the evidence suggests that prices are now down at least 5%, maybe heading fast towards down 10%. Actually the total with skinny equity even with the old values is rather high, now figure 24% under 10% equity assuming a 5% price drop since Sept, and a whopping 39% of ARMs debtors, and how about 61% of 2005 vintage using ARMs now under 10% equity. How can this analyst be so complacent, the combination of price drops and resets is lethal? I also think he understates the reset sensitivity, by assuming they just refi to a fixed at 6.35%, lol (the reset rate for prime mortgages is over 7.25% now, closing in on 7.375%), that's another hole in their theory. He then makes a huge leap of reasoning on that middle rate ARMs group, assuming that 2% rate resets (he uses 1.3%) won't have much impact. He fails to ask the key question, what percentage of household income was already 30, 40, or even 50% used for housing payments before the reset? Without that variable how could he make such a benign statement? He comes across as a canard honestly.