bubbleinfo.com

Neg-Am 399 [sub-prime] 222,802 (31%) [Alt-A]

Low or No Doc 47.4% 83.2%

ARM Already Reset 121,918 (25%) 202,539 (28%)
Reset Next 12 mo 43.4% 3.6%
Reset 12-23 mo. 14.3% 4.9%
Reset 24+ mo. 6.2% 43.3%
In Foreclosure 12.5% 4.3%
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If these numbers are correct, they are stunning. The number of neg-am AND low/no doc in the Alt-A loans is amazing. Also notable that most of them reset in 24+ months.

I firmly believe that we will not see the bottom of the cycle until all of these loans have reset and been cleared out of the system.

The sooner we get this over with, the better.

Am I reading this right? 67% of the Alt-A loans are either Interest Only or Neg-Amortization? If that's true, we're in for a real E ticket ride. Someone please tell me I'm not reading that right.

83% are no doc (liar loans) WOW. You just can't make stuff like this up ... no one would believe you.

The sooner we get this over with, the better. 100% agree Sadly, that is not the tactic being pursued.

Those no-doc liar loans are foreclosures just waiting to happen.

Got Popcorn?
Neil

"83% are no doc (liar loans) WOW. You just can't make stuff like this up ... no one would believe you."

By their very definition, Alt-A loans are 'low doc.'

This data looks bad. Even in the worst areas, it claims there are fewer than 100 subprime and 100 alt-A loans per 1000 housing units.

How can that be?

The FED knows very well what's going on here, because this was all planned well in advance.

Please see Allan Russo's "America: Freedom to Facism" movie on You Tube.

This is all staged, just like our elections! Wake Up America!

I know all Alt-A Loans are not so called "liar loans", but I bet a large portion of them have some funny stuff going on with them.

Correct me if I'm wrong, but no or low doc loans were created (or existed to the benefit of) for the self employed. I find it hard to believe that everyone of these Alt-A loans went to benefit a self employed individual.

Some other "legitimate" reasons for a low or no doc loan would be difficult to substantiate income, but the more creative people got the less legitimate the nature of the loan.

I didn't mean to imply all Alt-A loans are liar loans, but I bet a majority of them are. How else can 2% of the population (those making $250K a year) afford all of those Million dollar properties?

The numbers seem to give a mixed picture. Looks like subprimes are just about through the system but the Alt-A's won't really hit for 2 years. A lot can happen in 2 years. Good or bad.

Also, the debt amounts aren't that shocking and don't relate to $1MM home purchases.

However, also not represented were the typical HELOC's that nearly everyone obtained with their 1st.

Lastly, a FICO over 700 is quite good. These are probably steady people who don't glibly walk away from responsibility.

Either the wheels are going to come off and all of us will be out of work this time next year or we're grinding through the bottom right now.

That's the question Mozart. What does this actually mean for someone in the market for a 2500 sf house in a nice part of North County? Will there be a huge fallout in that segment over the next two years? I think that the people in those houses all have jobs that don't seem to be going anywhere. I don't think they'll walk away from their loans in droves like the sub-prime market. That's the question though. Will the 640K house be worth 540K next year?

>700 FICO must not be very compelling, with 23.5% of Alt-A's having a late payment. What would compel a person with good credit to pay for a house he's deeply underwater on? What's more important, his credit or tens of thousands of dollars every year into a hole?

That's the problem with FICO scores - they're based on paying $50/$500 bills and are then extrapolated into $5000 mortgages. Perfectly fine for double-checking that someone who definitely can afford a mortgage will choose to pay. But fico is useless without proof of income..

I have perfect credit, should you assume I can pay for a multi-million dollar house? I don't know where any bank got the idea that good fico = lots of income.

I feel compelled to this string. I bought my home in 2005. My FICO score was over 750. I could document my income. I purchased my home financing 100% with 80% mtg. in the amount of 440,000 and a HELOC of 110,000. My household income is 175,00. My loan resets in 2010. As I sit here today I'm contemplating walking away from the home. I have no car payments. I have no credit card dept. I can afford the payments at the ceiling of the mtg. amount. When I took out the loan I looked at historical data for the vehicles my mtg. and HELOC's were tied to. My Mtg. has a max. ceiling. Using a worse case scenario I determined I could afford the payment. I would be living really tight, but could make the payments. The one thing I didn't take into consideration is the insane devaluation of the home. Given the current circumstances I believe when things level out in 3 to 5 years my home will be worth in the neighborhood of 200,000 less than the purchase price. Once things level out appreciation will be about 1 to 3% a year. I simply can't afford to take that kind of hit. It could conceivably take 10 to 15 years to break even. I'm not the only one looking at these numbers. I pay my bills. I always have. I consider myself responsible in that regard and my credit score reflects this. Regardless I have to protect myself and my family from financial ruin. I will be deciding this weekend if I'm going to walk away from my home. I'm meeting with a real estate lawyer and a tax accountant to make sure I have all the correct info. My research, which I will confirm, indicates that the bank cannot and will not come after me if the home goes into foreclosure. I'm pretty sure I will be taxed on the difference between the amount owned less the amount the home is appraised at when the bank takes possession. In other words the longer I wait the larger the tax burden will be if prices continue to decline. Does anyone here believe prices won't substantially decrease over the next 3 to 5 years?

Things are going to get much worse. People basically have to walk away. The government will set up programs to bail out the banks and they know that. I contacted my bank hoping to work something out but they aren't receptive. I have money in the bank I would be willing to put towards the principle if they were willing to refinance at a fixed rate for a lower principle amount. I wouldn't expect them to reduce the principle to the market price. I would be willing to take a hit in that regard, but I would expect them to take a hit also. They won't budge. What possible reason would I have to stay in the home. I understood the terms of my loan. I understood the ramifications of the reset. I even was aware the value of my home may decrease. What I didn't understand and anticipate was the amount of the decrease in the value. It was my first home and admittedly made a mistake. Evidently it was the same mistake made by banks and Wall street who were much more educated and experienced than myself. At the end of the day a home purchase and mortgage agreement is a business transaction. The bank who loaned me the money did so in a non recourse state. They understood the terms of the contract and believed the risk of no down payment interest only was a good business decision. At this point it looks like I'll have to give the home back to them. I also have a credit line that is still available to me. I'm considering using it to compensate for the amount I'll lose when the government knocks on my door for what they consider "phantom" income for the difference between the amount owed on my loan the the value of he home. I consider the equity line phantom cash at my deposal.

I believe my real life example illustrates the individual vs corporations and government. I'm simply applying the same standards they apply when making a "business" decision. I guarantee I'm not the only one looking at this situation the same way.

Things are going to get much worse. Home prices will fall to 2000/2001 amounts. Anyone who bought a home from 2004/2007 should get out now or risk losing their ass.

watupp-

You sound rational and logical and are doing the right thing for yourself if you don't need credit in the next few years. Keep in mind that credit card companies will be tightening standards (i.e., you may get some cards cancelled or have their limits reduced even with good payment history) as will auto loan firms.

You should have ZERO tax liability if this is your primary residence, as you qualify for the home owner tax exemption of up to $250K (or $500K if married) since you lived there for more than 2 years. DO NOT take out extra loans on the property, as loans after the "purchase money" (i.e. used at time of purchase only to buy the property) are recourse loans in CA, while the purchase money loans are non-recourse in CA. In other words, if you tap your remaining credit line, that may come back to haunt you.

Good luck and I'm glad you are talking with a CPA and real estate attorney. Consider "youwalkaway.com" for more info/assistance.

To Watupp and AJB:

Seriously? Are you both so full of it your willing to advocate this type of action?

" wouldn't expect them to reduce the principle to the market price. I would be willing to take a hit in that regard, but I would expect them to take a hit also. "

What type of hit would you expect them to take when they cave into your pressure and a year later, you still take a hike? Give me a break.

"I would be living really tight, but could make the payments." This and you would still walk away simply because it would take longer than you'd like to get your money back?

"I purchased my home financing 100% with 80% mtg. in the amount of 440,000 and a HELOC of 110,000." What????? you make 175,000 per year and you still couldn't manage to scrape up 5% for a down payment? Give me a break! There is something going on here and I don't think you are giving the full story. How the hell could you make 3,500 per week and still not be able to afford this house or a down payment?

"You sound rational and logical and are doing the right thing for yourself "???????

Seriously? You are just as bad as the other ass hat!

The both of you should take a leap.

And waiting for the moronic retort in... three...two...one....

I purchased my home financing 100% with 80% mtg. in the amount of 440,000 and a HELOC of 110,000."

I guess you couldn't afford it then, could you?

It looks like this thing is already beginning to hit.

"The rate of option ARM delinquencies is already spiking"

"A major concern is that 70% of option arms are concentrated in California and Florida – two states that have already been hard hit by the housing slump. Subprime mortgages, on the other hand, were dispersed across the country (about 60% of them were outside Florida and California) And as prices in those states continue to fall, refinancing options for these borrowers disappear even as recasts loom.

According to a recent analysis by Lehman Brothers, option ARMs that originated in 2006 performed about as well as fixed-rate Alt-A debt for the first 12 months. But by the time they were 2 years old, about 2.1% of performing loans were going 60-days delinquent each month. Compare that to a 1.2% of current loans going delinquent with other Alt-A loans. The rate of increase in delinquencies is even beginning to approach that of subprime, which is about 2.5%."

Thanks Larry, I'll put that up front

after taxes his family makes about 10k a month and they can't put 55k (10%) down??

Instant gratification is a killer! How about some economic defense?

Still no clear explanation as to why they would be economically ruined if they keep their house.

The only thing falling values does is prevent the family from taking out more HELOCs. Otherwise, if they could afford the payments before, they can afford them now.

Is there no honor among the rats on this sinking ship. Does the rationale work this way? I'll stiff the bank first and trash my committments and good name and throw my home into the "Inventory" early.....then I'll rent for 5 years and repair my credit while using a more than adequate income to "actually save for a down-payment"; then look to purchase a home at basement prices. The first guy to begin the repair process wins?
If every one thinks this way, then of course it will take 10 to 15 years for property values to recover. Honored obilgations will keep this house off the market and out of the inventory and supply and demand will have a better chance of working it's magic in our free market economy.
Honor your committments WATTUP! I'd rather have a house that's up-side down, a tightened belt, a current mortgage and my good name. Sorry if that smacks of old fashioned values...on second thought, maybe I'm not that sorry.