Alec

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    • Wed May 14th 09:53 AM | Rating: 0 0
      Commented on:
      NAR's Lawrence Yun Continues to Mislead on Housing
      Obviously many of you have no solid information to make your predictions on. They just seem like a logical conclusion to you, and you put it in print. The reality is, from someone in the mortgage business for the past 16 years:

      After the subprime arm resets comes the option arms resets. From what I've found, this portfolio of loans is larger than the subprime portfolio was. As with the subprime arms, payments are going to adjust out of reach for many who are upside down, unable to sell and unable to refinance. Can you say FORECLOSURE?

      After that comes the FNMA/FHLMC 30 year fixed interest only. This is the prime loan category that some brainiac said would have a melt down. As a mortgage professional, I think this will be the biggest melt down of all. This is an enormous portfolio of loans that are interest only for the first 10 years and then convert to a 20 year fixed mortgage. That will raise the payments 30-40%, even though the rate stays the same. These borrowers got in with 0 down and a 65 debt ratio. They definitely cannot afford the increase, and will not be able to refinance or sell. Can you spell FORECLOSURE?

      Don't forget, everything is getting more expensive and pay checks aren't going up. That expense has to be absorbed somewhere. I already have customers who commute from the suburbs of Phoenix who are paying more for gas than for their mortgages (2 commuters in the household).

      And, by the way, rates really don't have anywhere to go but up. For those of you who think that won't have a dramatic effect on prices, wake up.
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    • Thu Apr 24th 19:18 PM | Rating: 0 0
      Commented on:
      The Impending Mortgage Crisis
      Good article, but I think needs to go one step further. There is another major chunk of loans that will reset after the pay option arms. FNMA and FHLMC offered 30 year fixed rate interest only loans that were extremely popular. These loans were fixed rates with interest only for the first ten years after which the payment resets to a 20 year fully amortized loan. So, for example, if you have a 30 year fixed rate at 6% on a loan of $200,000, your interest only mortgage payment for the first 10 years would be $1000 per month (not including tax and insurance). After your 10 year interest only period, your payment will adjust to a 20 year fully amortizing payment of $1432. These borrowers will find themselves in the same boat as those who took out arms. A new payment that they cannot afford, upside down in their value and unable to refinance and unable to sell.
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    • Wed Apr 2nd 12:04 PM | Rating: 0 0
      Commented on:
      How Far Will House Prices Fall? Implications From the Latest WSJ Survey
      A very complicated way of doing something very simple. I am a mortgage lender. The loan programs we have left require full income verification and allow 1/3 of gross monthly earnings to be for housing. So, in a nutshell, take the median household income of any given area times 3 and you get a general idea of where median home prices need to be. They will actually be somewhat less because consumers have overspent in all areas, not just housing. Then consider the oversupply and that every day we have thousands of people who no longer qualify for financing at all because they have a foreclosure. Prices will be cut at least in half. Maybe as much as 2/3.
      View article »
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