'Perfect Storm' Brewing in Home Defaults

Las Vegas Business Press ^ | March 27, 2006 | Valerie Miller

[ex-Texan]

Nevada ranks second in the nation at 61.3 percent, behind only California (69 percent; in 2004, it was 46 percent), in the percentage of potentially negative-amortizing mortgages, including interest-only and products with ARM options, according to the Federal Deposit Insurance Corporation's most-recent numbers.

The perfect storm is coming for California home owners! Nationwide, nearly half the people who bought a home in the past three years are in for major trouble. Their home loans will reset at 'current interest rates' plus. (Today that is about 6.8 % or 7.3% APR for most borrowers). Major trouble exists if the mortgage was automatically deferring unpaid interest and adding it to the total sum due. [Learn More?] Time to wake up and smell the coffee. For my naysaying friends out there I reiterate your mantras: 'Nothing is really going on. Nothing to see in my neck of the woods. Time to move on.'

[spyone]

Yup. For the past 6 mos. home sales are down and unsold inventories are up. Prices have nowhere to go but down.

[freedomlover]

I don't know anything about the housing market but the new interest only loans just feel wrong to me.

[Larry Lucido]

If all these lenders want to become real estate companies, have at it. I'm sure their loan portfolios aren't going to be helped much by massive foreclosures and being stuck with unsaleable properties.

Not saying I like ARMs, mind you.

[stainlessbanner]

I wonder home many folks with those interest only loans are getting squeezed by rising interest rates, rising insurance rates, and rising energy costs (for cars, homes, etc).

[Petronski]

Fresh hysteria and blogpimping!

Get yours now!

[maine-iac7]

Qualifying and buying with interest-only loans - the banks newest scam to get people in over their heads.

And the crowd that can afford to flip houses for a quick windfall...these are the things that are going to bust the bubble...and like in a Ponzi scheme, the folk that buy in the period just before the bust are going to be left holding the bag.

In the meantime, these schemes have served to drive home prices into an insane range. This leaves a lot of people out of the housing market - unless they leave a lot of high end areas.

Rents rise along with it all - and pretty soon, the service providers wont be able to live close enough to clean the houses and mow the lawns - ;O)

[maine-iac7]

I wonder home many folks with those interest only loans are getting squeezed by rising interest rates, rising insurance rates, and rising energy costs (for cars, homes, etc).

and quadrupling taxes

[Nomorjer Kinov]

It seems like the mortgage lending industry has instigated its own pending trouble. The interest-only and ARM loans made homes more "affordable" by allowing for lower payments. That impelled buyers to purchase larger homes than they might otherwise and caused bidding wars in some places.

Now the lenders are left to complain about the looming defaults caused by their easy credit policies (sigh).

[investigateworld]

LOL

[putupjob]

It is fitting that Nevada has a housing market that is based on SEE 'EM and RAISE 'EM.

Another version of casino gambling.

[Howlin]

LOL!

We seem to be "full up" with it around here!

[stylin19a]

so, Nevada is below the national average for % of delinquencies on sub-prime ARM's ?

now, 61.3 % of how many ? as in how many sub-prime ARM loans are in Nevada ?

keep cherry pickin...you're the best at it.

[grey_whiskers]

I'm going to bookmark this page just to get your exciting graphics.

Cheers!

[woofie]

Is there a hysteria factory somewhere?

[Petronski]

We're all doomed.
Doomed! DOOMED!!!

[Petronski]

There's an entire Hysteria-Industrial Complex, by the looks of it.

[JennysCool]

Okay, okay, you're nominated for Special Effects!

[Howlin]

Speaking of panic and hysteria, have you been paying attention to this lacrosse-rape thing here at Duke?

[woofie]