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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (233836)	12/20/2009 11:17:41 PM
From: The Reaper	Read Replies (1) \| Respond to of 306849

It's not just the interest rate that's the problem. Many of these homeowner's haven't been even making payments to cover the teaser interest on their loans (Pick-a-Payment.) Mortgage balance going up and then the teaser rates going away and these loans being recast to market interest rates are going to make payments go significantly higher. Interest rates in general have gone down since the origination of these loans but these loans have been a world of their own with the teasers. That parallel universe is about to end.

To: Skeeter Bug who wrote (233836)	12/21/2009 1:06:18 AM
From: Cal Amari	Read Replies (1) \| Respond to of 306849

I am not so sure that the resets will be going to lower than "teaser" rates. I suspect that reset terms are all over the map. Most mortgage holders were not terribly concerned about resets given the then-prevailing assumption that folks could just refi at the time the reset came due. A friend of mine in the Bay Area just refinanced his ARM into a 30 year fixed loan after a nasty reset. The killer for him was having to pony up OVER $110K in total - mainly to pay down principal to get to 80% LTV, but also including origination points. He and his spouse are both working and able to pay the loan. With SoCal unemployment still rising (and the easy money in real estate and mortgage finance on the wane), a lot of folks are going to have a hard time paying their mortgages - whether teaser or reset (but especially reset). All IMO, of course.