Posted on 09/15/2009 11:54:48 AM PDT by RC one
The housing market faces the prospect of a new round of foreclosures as hundreds of thousands of risky home loans known as option adjustable-rate mortgages reset to significantly higher payments that could force borrowers to fall behind, according to a report released Tuesday by Fitch Ratings.
About 70 percent of the $189 billion in outstanding option ARMs will reset by 2011, the report said, which would be another setback to a teetering housing market still struggling to recover from the mortgage meltdown that precipitated the financial crisis.
Option ARMs make up only 1.3 percent of percent of outstanding mortgages and were used by a far smaller segment of the population than subprime mortgages, according to First American CoreLogic, so the fallout from the resets should not be as devastating. But the unraveling of the option ARMs could be felt for years.
"It does tell you there's going to be continued front-page news about high levels of foreclosures as these loans continue to struggle," said Paul Miller, an analyst at FBR Capital Markets
(Excerpt) Read more at washingtonpost.com ...
I think things are getting worse. I know people in my neighborhood who have been riding it out. Some are really getting stressed now. I am think the middle of next year or sooner - a lot of the middle class that has been hanging on may start going under.
The markets are overvalued and this Fall (soon) is not going to be good.
I got out a year ago and didn’t bother jumping back in. Perhaps I should have but the few thousand dollars I might have made would probably not even have covered the cost of the ulcer I would have developed earning it. LOL I did by gold and silver though so I’m not completely out.
I’m one of the ones hanging on ,,, my thinking is if I can make it til 2q ‘10 things will have gone downhill again (probably to a significantly lower level than we have yet seen) and something drastic will have been proposed or passed and monetarily “nothing” will really matter except survival. The middle class is stressed as you stated ,, there are no “lifelines” left , the 401k’s have run dry , taxes are going up (especially state taxes).. I disagree that the markets are overvalued ... I feel the high valuations are merely a reflection of the falling dollar,, I do agree that this 4q ‘09 could be bloody as people try to hold onto gains by selling ... we’re certain to have hundreds of “worst Christmas ever” news stories ...
My parents live in a nice, older but mid-range suburban neighborhood in the Detroit area. They saw prices on their street go from around $200K (asking $209K at the height in 2006) down to actual sale prices of lately of $50K (for the house next door) and $61K (for the house across the street). That’s in a 3 year timeframe, meaning mortages with more than a few years left on them are universally underwater. Somebody is losing tons of money these days, and I doubt if highly leveraged financial companies can sustain those kinds of continuing losses. Ugh, ugh, ugh.
$189 billion sounded like real money a year ago. Now, anything less than a trillion is chump change.
It’s a Zimbabwe thang.
I agree. We have the illusion of stability as the dollar collapses. Meanwhile people will start noticing anything imported will start getting real expensive (the trade balance hit a new negative record in July), meaning that we won't be able to buy oil or Chinese goods like we have in the past. No wonder all those freighters are sitting empty off Singapore when they should be ferrying over our Christmas purchases right about now.
I am sorry to hear that and I hope things improve for you.
As far as the media running worst Christmas ever?
Oh ye of little faith in the liberal news media!
We will hear all about Kwanza at the White Hut and whatever Muslims practice at Christmastime.
We will read stories have Muslims feel persecuted during Christmas.
We will hear all about green shoots and Michelle’s winter wardrobe.
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