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Stupidity And Duplicity

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Stupidity on behalf of the borrowers

Duplicity on behalf of the lenders and loan arrangers.

Loan-term resets could shock homeowners

Sunday, August 20, 2006

KENNETH HARNEY

Call it the reset jitters.

Lenders, mortgage investors and financial regulators are concerned about the ability of millions of homeowners to handle the potentially painful payment spikes coming due on loans they took out during the height of the housing boom.

.......

Lenders with mortgages carrying negative-amortization and interest-only features say they have taken care to ensure that their customers comprehend the inner mechanisms of their reduced-payment loans. They also insist that they’ve reserved these high-risk programs for borrowers with solid credit scores, large down payments and excellent employment histories.

Wall Street analysts have questioned those confident assurances, however.

Standard & Poor’s, the mortgage bond-rating agency, warned last year that it was observing disturbing numbers of minimum-payment loans being extended to borrowers with subpar credit profiles. Other Wall Street companies noted that, given the option to make minimum payments, more than seven out of 10 borrowers did so. In the process, those borrowers are racking up heavy additional debt balances and could be heading for payment shocks — or worse.

........

To head off potential problems, the largest mortgage originator in the United States, Countrywide Home Loans, quietly has begun sending out letters to thousands of borrowers who have been making only the minimum payments on the company’s popular PayOption adjustable-rate mortgages

......

The current full interest rate on the loan is 7.6 percent, but the borrower has been paying just $1,348.47, far less than what’s needed to fully amortize the mortgage during its 30-year term. If the loan reset at today’s rates, the letter explains, the full payment required would be $2,887.50 — more than double what the homeowner has gotten used to paying. Future reset rates could be even steeper.

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Onlyme

That's gotta hurt!

Cripes that's gonna keep thing going south for a while.

No rush at all for the U.S. FTB to rush in then.

Interestingly do that not say in the States that if you haven't gone bankrupt 3 or 4 times you'll not make it?

Odd but true so I believe.

What is it with gambling and houses?

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Stupidity on behalf of the borrowers

Duplicity on behalf of the lenders and loan arrangers.

Loan-term resets could shock homeowners

Sunday, August 20, 2006

KENNETH HARNEY

Call it the reset jitters.

Lenders, mortgage investors and financial regulators are concerned about the ability of millions of homeowners to handle the potentially painful payment spikes coming due on loans they took out during the height of the housing boom.

.......

Lenders with mortgages carrying negative-amortization and interest-only features say they have taken care to ensure that their customers comprehend the inner mechanisms of their reduced-payment loans. They also insist that they’ve reserved these high-risk programs for borrowers with solid credit scores, large down payments and excellent employment histories.

Wall Street analysts have questioned those confident assurances, however.

Standard & Poor’s, the mortgage bond-rating agency, warned last year that it was observing disturbing numbers of minimum-payment loans being extended to borrowers with subpar credit profiles. Other Wall Street companies noted that, given the option to make minimum payments, more than seven out of 10 borrowers did so. In the process, those borrowers are racking up heavy additional debt balances and could be heading for payment shocks — or worse.

........

To head off potential problems, the largest mortgage originator in the United States, Countrywide Home Loans, quietly has begun sending out letters to thousands of borrowers who have been making only the minimum payments on the company’s popular PayOption adjustable-rate mortgages

......

The current full interest rate on the loan is 7.6 percent, but the borrower has been paying just $1,348.47, far less than what’s needed to fully amortize the mortgage during its 30-year term. If the loan reset at today’s rates, the letter explains, the full payment required would be $2,887.50 — more than double what the homeowner has gotten used to paying. Future reset rates could be even steeper.

Link please.

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This problem must be about to start hitting over here soon. This months rate rise will make a difference when those two deals start coming to an end.

One of the chaps in my office is just going through the process of re-setting his mortgage. Sound like he has been doing the right thing and doing a discounted repayment mortgage and is looking for another deal, but some folk will have done the IO option and they could be particuarly vulnerable.

Given that our housing market has been at or near the top for nearly two years and the first 'toppers' are just coming up to the reset, we could have two years of really painful re-sets, more if the base rates continue to rise over the next two or three years.

It just occured that some people could get hit twice!!

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  • 333 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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