[Econ.] This Is Going To Be Bad.

[stroh]

http://www.msnbc.msn.com/id/28035238/

We have yet to see the worst of the foreclosure disaster.

I had never heard of this "pay option" ARM.   This is sickening.  The whole ARM, more than you can afford in 3 years, do it anyway thing was bad enough.  Then some assclown came up with an ARM that you pay what you want, and the rest negatively amortizes to your principal, and then the whole thing resets in 5 years?

Whole lot of *fudge*ed people and banks in the near future.

[Fuzzy]

These “pay option” adjustable-rate mortgages gave borrowers a choice of payments each month. They also carried a feature that came as a nasty surprise to some borrowers, called "negative amortization."

A nasty surprise? No, a nasty surprise is the one coming for people like me who actually *goshdarn* read and understood their mortgage options and opted for a good old-fashioned standard mortgage that we could afford and now will get stuck having to bail these people out to keep from furthering this disaster.

I just can't lay all of this on evil mortgage companies/banks/etc even though I think a lot of those folks should be in jail. I know there are those who misled borrowers but, at some point, personal responsibility has to come into play. Really, I can get a $500,000 house and only pay $300 bucks a month if I want? Where do I sign? Whoo-hooo! Greed isn't limited to corporations I guess.

Rant over. Plus I have a nasty cold today and am not feeling very well to begin with.

[stroh]

Completely agree.

That's what caught my eye.  Being naive or "duped" on an ARM is one thing, but to actually sign up for something that allows you to pay less than what is require on something that is less than what is required to begin with until it blows up in a few years.

What did these people think was going to happen?

[Spartan]

What were these people thinking?

I've got to stop reading about this crap and go stick my head in the sand.  At least I'll feel better (for a while).

[Clive]

I'm no defender of the ARM crowd, but I'll bet they were thinking their property would go up in value and they'd either refinance or sell.

Like I'd written earlier: I never really thought deeply about it, and I just kind of assumed that real estate values always rose.  Not meteorically, but steadily and constantly.  My guess is that other people thought that, too, or even experienced it before and had no firm reason to think that over five years it wouldn't continue to happen.

I know a guy (finance major in college!) who bought a 4-bedroom family home on a five-year ARM.  his job wasn't such that he was going to make partner or otherwise see a big jump in income, nor was his wife returning to the workforce.  I guess he thought rates would drop and he'd refinance (somewhere within that five-year window) at a better rate than he got at closing.  Didn't happen, though, and they bailed on the house just a couple months before the rate was scheduled to reset.  By "bailed", I mean sold it and bought another one.

[Blader]

These “pay option” adjustable-rate mortgages gave borrowers a choice of payments each month. They also carried a feature that came as a nasty surprise to some borrowers, called "negative amortization."

A nasty surprise? No, a nasty surprise is the one coming for people like me who actually *goshdarn* read and understood their mortgage options and opted for a good old-fashioned standard mortgage that we could afford and now will get stuck having to bail these people out to keep from furthering this disaster.

I just can't lay all of this on evil mortgage companies/banks/etc even though I think a lot of those folks should be in jail. I know there are those who misled borrowers but, at some point, personal responsibility has to come into play. Really, I can get a $500,000 house and only pay $300 bucks a month if I want? Where do I sign? Whoo-hooo! Greed isn't limited to corporations I guess.

Rant over. Plus I have a nasty cold today and am not feeling very well to begin with.

We're all rowing the same boat, brother.  You got a problem with greed?  Take it up with Mr Potter.

[Fuzzy]

These “pay option” adjustable-rate mortgages gave borrowers a choice of payments each month. They also carried a feature that came as a nasty surprise to some borrowers, called "negative amortization."

A nasty surprise? No, a nasty surprise is the one coming for people like me who actually *goshdarn* read and understood their mortgage options and opted for a good old-fashioned standard mortgage that we could afford and now will get stuck having to bail these people out to keep from furthering this disaster.

I just can't lay all of this on evil mortgage companies/banks/etc even though I think a lot of those folks should be in jail. I know there are those who misled borrowers but, at some point, personal responsibility has to come into play. Really, I can get a $500,000 house and only pay $300 bucks a month if I want? Where do I sign? Whoo-hooo! Greed isn't limited to corporations I guess.

Rant over. Plus I have a nasty cold today and am not feeling very well to begin with.

We're all rowing the same boat, brother.  You got a problem with greed?  Take it up with Mr Potter.

Not everyone is rowing. As I've stated before, I get the point. I'm just guessing that the upcoming plan to rescue these folks from themselves might involve resetting mortgages at "X". If "X" is lower than my mortgage rate do you think I'll get to drink from the well and refinance? Highly doubtful.

[stegerman]

http://www.usatoday.com/p....htm?loc=interstitialskip
Like no one saw this coming...

[MFAWG]

http://www.usatoday.com/p....htm?loc=interstitialskip
Like no one saw this coming...

 
I like this part of the article the very, very best:

Economists, lenders and other housing experts are concerned that programs to bail out troubled homeowners might have an unintended consequence: encouraging people to miss mortgage payments so they can qualify for a handful of programs that ease loan terms.

"It's a problem," says Mark Zandi, chief economist and co-founder of Moody's Economy.com. "A lot of the programs require you to be at some stage of delinquency, so homeowners say, 'What about me?' and they get delinquent in order to get help."

Many mortgage modification programs require that borrowers be 60 to 90 days late on payments to get a mortgage reworked.

There are no statistics or surveys that track how many homeowners might deliberately be putting off mortgage payments, but dozens of economists and other lending experts say it's a risk.

We're not sure, but we think it's happening.

Ergo:

It won't be long until the usual suspects have you believe that EVERYBODY falls into that boat.

The Right Wingnuts will be SURE it's 'Those People' (Messicans and Negro's), and The Left Wingnuts will be sure it's overextended yuppies making over 500k a year.

[Blader]

These “pay option” adjustable-rate mortgages gave borrowers a choice of payments each month. They also carried a feature that came as a nasty surprise to some borrowers, called "negative amortization."

A nasty surprise? No, a nasty surprise is the one coming for people like me who actually *goshdarn* read and understood their mortgage options and opted for a good old-fashioned standard mortgage that we could afford and now will get stuck having to bail these people out to keep from furthering this disaster.

I just can't lay all of this on evil mortgage companies/banks/etc even though I think a lot of those folks should be in jail. I know there are those who misled borrowers but, at some point, personal responsibility has to come into play. Really, I can get a $500,000 house and only pay $300 bucks a month if I want? Where do I sign? Whoo-hooo! Greed isn't limited to corporations I guess.

Rant over. Plus I have a nasty cold today and am not feeling very well to begin with.

We're all rowing the same boat, brother.  You got a problem with greed?  Take it up with Mr Potter.

Not everyone is rowing. As I've stated before, I get the point. I'm just guessing that the upcoming plan to rescue these folks from themselves might involve resetting mortgages at "X". If "X" is lower than my mortgage rate do you think I'll get to drink from the well and refinance? Highly doubtful.

My guess is the homeowner bailout terms, should any come into existence which I still say remains a huge IF, will be structured in some way to make them unpalatable for good people like yourself.  Anything from a credit score scarlet letter to wage garnishing seems within the realm of reason.  IOW, this is probably going to be a gravy train that the credit worthy will be happy to see pass by without stopping for them.

And it is not like the credit worthy don't benefit from this sort of thing. 

Ultimately, the ideas getting knocked around are less about saving the moron who financed 120+% of his home purchase, and more about shoring up the value of his property until someone who is more able to afford it can come along and take it off his hands. 

If his property value stabilizes, so will yours.  That means more wealth for everyone except Aske!!

[birdymaker]

just wait till the "credit card crisis" hits. you ain't seen nothing yet.