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mbga9pgf

Mr Mortgage Blog Action 14 Aug 09

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http://mhanson.com/blog

Over the past two days, the popular foreclosure reporting firms released their monthly numbers and the takeaway was that the foreclosure crisis is getting worse. Indeed, the foreclosure crisis is worsening, but July’s actual foreclosure numbers do not pose much additional risk to the housing market because most of the worsening was seen in the pre-foreclosure pipeline (notice-of-default & notice-of-trustee sale). Based upon July’s results, the players that will feel most of the additional reported foreclosure pressure are the banks, mbs holders, insurers, and servicers.

On April 7th, I made the call for a “foreclosure-wave†to hit CA and other bubble states based upon our proprietary data — the trend was obvious. A CA wave did build from April to June with foreclosures going from less than 10k to over 22k. But in July it aborted because of gov’t interference through HAMP and the July 28th servicer cattle call — no servicer wanted to go DC with record foreclosures in their books for July.

The only caveat in my 4-7 foreclosure wave report was “there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it?†Well, there ya go.

But despite CA foreclosures dropping m-o-m, the national foreclosure wave (red) that began a month later in May is still building with foreclosures up m-o-m. As other states start to feel the default and foreclosure heat, CA is not the swing state any longer.

Lots of graphs for analysis as well as stats. I'll let you fookers pour over the graphs over the next few days and come back to see what the consensus is. Its pretty beary though.

Edited by mbga9pgf

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But does it matter?

When they reset it's not like 2007 where the reset was from 3% to 7%+. The US IR is now tiny. Plus these are not sub prime they are a small cut above this.

My guess this is one of the reasons why CB's are desperately trying to talk down inflation expectations and keep IR's so low. Quite how the banks are going to re-issue this money I don't understand the process. I would have thought that it had been re-financed several times over already as my niave understanding is that most mortgage business is lend long term borrow short term.

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But does it matter?

When they reset it's not like 2007 where the reset was from 3% to 7%+. The US IR is now tiny. Plus these are not sub prime they are a small cut above this.

My guess this is one of the reasons why CB's are desperately trying to talk down inflation expectations and keep IR's so low. Quite how the banks are going to re-issue this money I don't understand the process. I would have thought that it had been re-financed several times over already as my niave understanding is that most mortgage business is lend long term borrow short term.

You need to go back and do your research on Option arm in particular. Option arm minimum payments are under half the interest portion alone. Once they lapse, they lapse to a full amortisation loan, with all the bells and whistles. Oh, they come with a lovely punitive interest rate to boot.

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You need to go back and do your research on Option arm in particular. Option arm minimum payments are under half the interest portion alone. Once they lapse, they lapse to a full amortisation loan, with all the bells and whistles. Oh, they come with a lovely punitive interest rate to boot.

Which means of course, that the amount outstanding at reset is higher than that at origination.

Plus, why would someone want one of these loans? Presumably because they can't really afford full repayments: they thought the property would go up in value and they could sell out with a profit.

These things are going to blow up alright.

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Which means of course, that the amount outstanding at reset is higher than that at origination.

Plus, why would someone want one of these loans? Presumably because they can't really afford full repayments: they thought the property would go up in value and they could sell out with a profit.

These things are going to blow up alright.

Big question is when? I dont think this is going to be Armageddon, but lets be honest, its not going to be good for the economy either.

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