The ARM Problem has not gone away. Today we examine an updated ARM reset schedule and consider its impact on our local housing market.
Irvine Home Address … 89 WINDING Way Irvine, CA 92620
Resale Home Price …… $615,000
{book1}
it's time for me to get away from here
just thought you oughta know the end is near
did you honestly think it would've worked at all
cuz evrything i've seen has only made me fall
there ain't much i can do now that i've seen the truth
there ain't much i can do now they've made me into
one of you
REPENT
for the kingdom of oblivion is at hand
REGRET
not a thing for all's as it was planned
REJECT
false gods false hopes and false ideals
RESET
push the button game over no more time to steal
Left Spine Down — Reset
Wouldn't life be much easier if we could hit a reset button and wipe away the excesses of the housing bubble? In the housing bubble era, reset is associated with a bad thing that happens to adjustable rate mortgages. I remember last year a few astute observers much wiser than me chastised me for worrying about adjustable rate mortgages because they were all resetting to lower rates — problem solved. Foolish me. I must be a Chicken Little sounding a false alarm, right?
I wrote most recently about The ARM Problem in the summary post Option ARM story. The problem with adjustable rate mortgages resetting and recasting to higher payments has diminished in importance because many of the loans have defaulted early, so now the major problem is shadow inventory. The ARM problem is still with us, and much of our shadow inventory — and ultimately foreclosure and resale inventory — is spawned from this lending monster.
$1 trillion worth of ARMs still face resets
By Zach Fox
While several industry observers worry about negative equity and unemployment driving foreclosures, a couple of experts point out that interest rates on mortgages remain a cause for concern.
Credit Suisse made waves in 2007 among housing bears with a chart that estimates the volume of adjustable-rate mortgages to face a reset each month. An updated version of the chart, which was provided to SNL, shows resets remain a worrying force over the next few years.
Most of the resets are expected to occur through 2012. Between 2010 and 2012, the chart indicates that $253.25 billion of option ARMs will adjust, while Alt-A loans totaling $163.71 billion will reset over that time. Altogether, $1.010 trillion worth of ARMs will reset or recast during the three-year period.
"Option ARM resets are still pending. … Nothing much has happened yet because rates were so low that resets were pushed back," Chandrajit Bhattacharya, head of non-agency RMBS and ABS strategy at Credit Suisse, told SNL.
That is not entirely true. Many of these loans are still pending, but the borrowers are not paying. The reset chart is not adjusted for shadow inventory. Many of the loans facing reset are already in default. Numerous of the light blue (Option ARMs) have already defaulted as have many of the light green (Alt-A loans).
Borrowers who already have seen their ARMs reset might be sitting on their hands and not refinancing into fixed-rate products, McBride said. Because mortgage rates have been so low recently, resets can actually lower, not raise, monthly payments. When that happens, borrowers might feel little urge to refinance into a fixed-rate product that would cost more per month.
This is the real problem; people will do anything, no matter how foolish, to lower their monthly payment because they believe the government will bail them out if interest rates move against them. Why wouldn't they? Moral hazard caused by lending bailouts emboldens both lenders and borrowers and ultimately increases the cost of the bailouts demanded.
"The avoidable scenario is interest rates start to go up over the next couple of years, and all of a sudden, millions of homeowners who are stuck in adjustable rate mortgages and haven't been able to refinance out of them become sitting ducks for big payment increases," McBride said. "And then here we go again. It's like 2007 all over again. And again, the HARP program is key to avoiding that iceberg, and we're headed right for that iceberg, and no one's turning the wheel because everyone's focused on mortgage modifications."
"If you look at it, there's almost probably 5 million borrowers sitting there in some sort of delinquency right now who have yet to be foreclosed upon. So if you say [the Home Affordable Modification Program] is going to save only a small fraction of that, the rest of them have to go through in some form of foreclosure or distressed sale," Bhattacharya said. "So it's definitely not over by any means."
Credit Suisse projects 10 million foreclosures over a five-year period starting in 2008.
To put the ARM resets schedule in context, these timelines represent the totality of the carnage the markets face from ARMs, but the actual foreclosures related to these loans may occur early due to unemployment, negative equity or a number of other reasons. Shadow inventory emerges from this schedule and pulls destruction forward. Loan modifications, which are supposed to be the market savior, increase the problem with terms that have escalating interest rates and increasing payments. So why is this a big deal here in California?
… option ARMs are concentrated in just a few states. A Fitch Ratings study from Sept. 8, 2009, reported that three-quarters of all option ARMs were in California, Florida, Nevada and Arizona.
Don't worry; Irvine has none of those problems, right?
More Foreclosures are Coming
From the OC Register: Foreclosures now are just 'tip of the iceberg':
[Bruce] Norris told hundreds of investors attending a seminar he held in Costa Mesa this past weekend that numbers indicating the appearance of firming home prices and fewer foreclosure auctions are “illusions.”
Government repayment and loan modification programs make foreclosure numbers appear lower for now, but are delaying the inevitable inability or disinclination of homeowners in trouble to hang on to property that has dropped in value by hundreds of thousands of dollars, he says.
Meanwhile, he says, redefaults on loan modifications are “sabotaging” government efforts.
Mortgage delinquencies will continue “skyrocketing,” he says, because:
- “The resets of the Option-Arm loans will cause a larger number of foreclosures than the subprime loans.
- “Resets are part of the problem, but a bigger concern is the owners who owe more on their home than it’s worth.
- “Commercial loans and credit card losses will soon add to the problem.”
- Unemployment is a signifcant factor. He says: “I think we will fall back into recession by the end of 2010, and the unemployment rate and underemployment rate will be about 20% in 2011.”
- Owners are finding it more and more acceptable not to make their house payments. The mindset, according to Norris: ” ‘I see my next door neighbor has stopped making his payment, and he just bought a camper.’ You can see that coming. We haven’t really been through the biggest part of the problem.”
Updated ARM Reset Schedules
For historical reference, I superimposed the new reset chart onto the old one to see how the original projections have changed.
In the cleaned up graphic below shows the next four years of adjustable rate mortgage resets.
More reason to believe the Bernanke Put, the implied protection of mortgage interest rates, is going to be kept in place.
The results of amend-pretend-extend are apparent, and in case the obvious is overlooked, restructured loans only postpone bank losses.
The amend-pretend-extend policy is like shoveling snow; the more you push the snow, the larger the build-up on the front of the shovel. Eventually, you will need to stop and remove the snow or you get stuck. Similarly, pushing ARMs out further simply adds to the problem and makes correcting the problem costlier.
Lenders believe that a rolling loan gathers no loss, so they would push the problem back endlessly if they could. Eventually, appreciation may bail them out, but the existence of these loans and the inevitability of higher interest rates will weaken appreciation or kill it entirely. Also, despite the foolishness of it, many of these loans are being underwritten today as affordability products. Rather than eliminating ARMs at the bottom of the interest rate cycle, we are expanding their use.
If the ARM problem becomes large enough, politicians will deem it too-big-to-fail and engineer another bailout. At this point it is difficult to advise people to take on conservative financing and do the right thing. So much moral hazard exists that I can not persuasively argue with someone considering an ARM loan. The system is there to be gamed, and everyone seems OK with that. Personally, I find it appalling.
Irvine Home Address … 89 WINDING Way Irvine, CA 92620 
Resale Home Price … $615,000
Home Purchase Price … $736,000
Home Purchase Date …. 5/25/2006
Net Gain (Loss) ………. $(157,900)
Percent Change ………. -16.4%
Annual Appreciation … -4.5%
Cost of Ownership
————————————————-
$615,000 ………. Asking Price
$123,000 ………. 20% Down Conventional
5.01% …………… Mortgage Interest Rate
$492,000 ………. 30-Year Mortgage
$127,487 ………. Income Requirement
$2,644 ………. Monthly Mortgage Payment
$533 ………. Property Tax
$300 ………. Special Taxes and Levies (Mello Roos)
$51 ………. Homeowners Insurance
$274 ………. Homeowners Association Fees
============================================
$3,802 ………. Monthly Cash Outlays
-$453 ………. Tax Savings (% of Interest and Property Tax)
-$590 ………. Equity Hidden in Payment
$240 ………. Lost Income to Down Payment (net of taxes)
$77 ………. Maintenance and Replacement Reserves
============================================
$3,076 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$6,150 ………. Furnishing and Move In @1%
$6,150 ………. Closing Costs @1%
$4,920 ………… Interest Points @1% of Loan
$123,000 ………. Down Payment
============================================
$140,220 ………. Total Cash Costs
$47,100 ………… Emergency Cash Reserves
============================================
$187,320 ………. Total Savings Needed
Property Details for 89 WINDING Way Irvine, CA 92620
——————————————————————————
3 Beds
2 full 1 part baths Baths
2,000 sq ft Home size
($308 / sq ft)
n/a Lot Size
Year Built 2006
2 Days on Market
MLS Number S607533
Condominium, Residential Property Type
Woodbury Community
Tract Wdgp
——————————————————————————
Highly upgraded Woodbury Townhome with highly sought after location!!! Like a model home.. Premium Location in Garland Park track across from Woodbury Park,Woodbury Commons Club,& Woodbury Elementary School. Gourmet kitchen with granite counter tile, upgraded cabinetary, stainless appliances and huge island. Formal dining room with living and family room. Master Bedroom has roman tub & separate large shower & large Walk-in Closet. Designer Paint. Highest quality hardwood Flooring and upgraded carpet. The Association Amenities Include BBQs, Clubhouse, Pools, Tennis and Sport Courts. Come and Enjoy Living in Woodbury.
Does the geometry of this picture look correct to you?
Do you like the carpet cleaning patterns? They look like rake patterns in Japanese rock gardens.
I think it is a mistake to think that some troubled mortgages have been refinanced into fixed rate loans and out of trouble. My understanding is that lenders do not “refinance” loans on properties that are underwater or on mortgages in default or mortgages for which the borrower may have difficulties paying. The ARM mortgages that are being refinanced are for owners who are not having difficulty paying their mortgages and on properties which have a good amount of equity. Fixed rate refinances have little to no effect on the number of problem mortgages or properties.
It is also important not to assume ARM resets are the only feeder of shadow inventory. Many ARMs have and will default, but many fixed-rate mortgages have and will default as well.
Refinance loans must be qualified for in this “full doc world” we know live in. Most people in trouble cannot get refi’d out of their immediate problems. If a borrower has an Agency loan – fixed or ARM – that is paid on time but is simply upside down, lenders can go to 125% LTV to refinance the mortgage. Once you get into these higher loan amounts, the options for refinancing become slimmer each day. Most borrowers who took out ARM’s of any sort but did not verify their income, are the transactions that will be in deep trouble. If someone has the time to do it, search for late 2005 to early 2007 vintage ARM loans (purchase or refinance)and you’ll likely find a failure rate over 50%. I’ve long maintained the problem was never the ARM loans – even Option ARM’s – but lax underwriting, the Stated/Stated loans that allowed minimum wage earners to purchase maximum priced homes with their mere signature as collateral.
My .02c
Soylent Green Is People.
IR, I don’t really agree with this.
With LIBOR at 0.83%, margin 2 to 2.5%, ARM is getting a better deal than fixed rate at the moment. When owner bought the house at fixed rate, they usually got it between 5 to 7%, with current libor, ARM is getting a 3.33% interest. And 1 year LIBOR Rate is keep dropping every month
The issue isn’t rate, but reset driven. Here’s a quick example:
$500,000 1st TD 5/1 ARM, 2.50 margin. No Neg. Interest only. 4.75% rate (typical for time period 2005)
$1,979.16 per month.
In 2010, the rate will drop to 3.33%, but the amortization will be for 25 years.
$2,457.76 +$478.60
Some people can absorb an increase like that in their mortgage payment. Not many however.
If the ARM adjusted with a remaining 5 year IO option, the problem is simply being kicked down the pathway. We will have to assume that the borrower is upside down – they bought in 2005 right? So come 2015, the loan becomes a 20 year amortization loan with rates unknown.
Let’s say rates come up to 4.75%. The payment is now $3,231 – 50% higher than the artificial IO payment they started with.
Bear in mind that most of these loans were underwritten with a 45%ish debt to income ratio ceiling in 2005 based on the IO payment. Come 2010 when the reset hits, or in 2015 when the day of reckoning comes, there will be little hope for the borrower in this scenario.
Mitoman – Soilent is right, but also take into account the free’er market effects to rates once all this central bank ass slapping subsides. Rates must be substantially higher. They can’t do this forever.
I’ve heard ex mortgage dudes tell me, “dude LIBOR just keeps getting lower, no worries brah” OK dude.
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Not sure if anyone has seen this yet,
http://www.nytimes.com/2010/03/08/business/08short.html?em=&adxnnl=1&adxnnlx=1268067793-mt5yJyQL+RuJT5980wfQcg
Discusses new Federal program to assist short sales.
I saw the NY Times article on Yahoo; too bad I’m out of the market to buy – at least for now…
https://www.irvinehousingblog.com/blog/comments/adjustable-rate-mortgage-resets-foretell-major-problems-in-california/#65575
From Yahoo:
Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”
WTF!?!?! Why am I paying the bank and the person who is living rent free a “fee” to “help out”?!?
Because you voted for the people making these decisions?
I can’t help but like your posts awgee. Yes, we are paying because we voted for the corrupt government we have.
The problem NOW is that the government is helping the banksters, and giving WELFARE to the ones who defaulted on their loans. This is nuts. Not only do they get to live there a minimum 6 months free, but now they get $1500 too? Have we declared a new war on ourselves? It *was* the War on Poverty, but it seems like now the government declared a war on responsible citizens! I wonder what wonderful name they have for this new war.. “War on Homelessness – a home for EVERY family is a fundamental right!”
This nation has gone stark raving lunatic mad. I honestly was thinking about the potential to retire in another country today.
Don’t forget, everyone loses jobs and benefits except the police and firefighters…..remember, 90% of your base pay retirement at age 50!!!! Do it for the children!!!
awgee,
Don’t blame me.
I voted for the real black man — Alan Keyes.
Alan Keyes is an absolute nutcase.
Ron Paul was also considered a nut job. That’s past tense.
You might vote for an idea, but if someone distorts that idea that doesn’t mean you automatically agree with the distortion.
I think saying “You voted for it so it is your fault/problem so deal” is a cop-out.
It is like saying “I hired/supervised/oversaw/voted for this person but I didn’t watch what was done, it ruined my business/job/house/country it is all his fault”.
The folks we each hire/supervise/oversee/vote for only have the ability to say what they think should be done. They do not have the ability to actually DO anything. It is up to the regular person to implement that request.
It is very easy to sit in front of our computers and opine, it is another thing to actually get off of our collective behinds and do something.
Take some ownership for mistakes made. If you don’t like the person currently in office, find a better person and make sure they get into office. If you can’t find that person, run for office if you think you can do a better job.
If you believe that you don’t “own” the perceived “mistake” because “the other guy did it”, I suggest you re-read this post.
Sry, OT, but I just stumbled about this:
http://i307.photobucket.com/albums/nn312/Paul_H_Rosenberg/Post-Jan-2010/ViolentCrimeRates–California.jpg
Did you know that? Irvine may have its shortcomings – small lots, above average prices – but this is impressive! Imho a low crime rate is a major argument for potential home buyers. Job well done, Irvine Police!
Sry for wasting all that space with the graph! I didn’t know that jpg links are automagically converted into embedded pics. Nice feature…
How many automated security devices (gates, guns, cameras etc.) can $100k get you? Cuz if you want to just own it yourself or buy within some gated community elsewhere, you can get the same numbers.
“How many automated security devices…”
I was thinking the same thing: pay $300 per square foot for Irvine, or $250 elsewhere, and plow a fraction of the difference into a top-of-the-line home security system. The Mello Roos on today’s property would pay for set of pistols, shotguns, kevlar vests, and more than cover the cost of any possessions stolen by burglars while you’re out.
Mussolini made the trains run on time.
The Fascists kept a lid on crime.
Good parenting is the main factor in low crime rates. They missed Rancho Palo Verdes with their two police cars and one detective, but RPV has no freeways — no quick get away routes like Irvine with a UC campus.
Today’s profile is a Trustee Sale flip.
Bought by a third party at Trustee Sale on 2/10/10 for $515,597
Hit the market less than a month later listed at $615K.
It will be interesting to see if this flip is successful.
Interesting. That did not show up on my property record search. Sitexdata must be behind on their updating.
I know some people in these situations. But there is nothing to fear. When the loan resets, people default. They don’t have to pay their mortgage. So their payment drops from $1,979.16 per month to $0, instead of $3,231. You would think the bank will then foreclose, but not really. Banks are being pushed by the government to not foreclose. Obama is pretty close to actually making it illegal to foreclose without first going through the mod process. With all the liquidity and special programs by the Fed and government, the banks are no longer being forced by the markets to foreclose. The Fed is buying their mortgage backed securities, so they can shore up their balance sheet without having to foreclose that much.
On top of everything is the mortgage modifications genius program from Obama and government. This allows you to extend any meaningful progress toward foreclosure. The worst that can happen from this program is that you qualify for a modification. If so, you will end up paying close to your original $1,979 but now it will be some type of amortized loan with government guarantees.
Of course, I’m being half sarcastic, half serious. Why do you think retailers and the consumer are reporting a pick up in sales, while default goes through the roof? With $1,979 extra dollars in your pocket you can buy a lot of extra stuff.
A lot of people are doing some variation of the above theme, just like everybody was doing a variation of the House ATM during the bubble. People are finding ways to keep their standard of living. I felt like an idiot during the last 3 bubble years for renting. When the bubble burst, I started feeling like a genius. It pains me to say this, but I realize once again I’m an idiot. Pretty sad. This will end badly, again (maybe in another 2-3 years).
WS Bankster ad local Banks may cry in public, but the govt makes the WS banksters and too big to fail banks more than whole by 0.2% rates to inflate the stocks to attract the Joe and Suzzy 6 packs for the culling.
As long as the house is not FC’ed, the bank can increase the receivables, if they FC, there’s a discount on the receivables. If they FC and sell, they must book true numbers (worst case for the solvency numbers). Best to sale at inflated price using a GSE loan — the govt is left holding the bag.
BHO new short sale plan may be okay. Might help clean up the FC mess by enticing the free-renters out of the house for only $1500 relocation assistance. But will $1500 be enough of a lure vs. free rent for a year?
I feel stupid for renting and saving.
From the article linked in the post:
Banks buy time restructuring loans, for the moment
Restructuring buys more time for borrowers to get back on track and may help banks avoid bigger loan losses. However, it may only buy banks time before problems re-emerge once again.
“Asset quality appears to have stabilized, but we just don’t know the impact of all these restructured loans,” said Paul Miller, a banking analyst at FBR Capital Markets. “This could mean problems persist for longer than investors expect.”
The mortgage meltdown and ensuing financial crisis left U.S. banks with billions of dollars worth of bad loans. The government and regulators have been pushing banks to modify mortgages to limit foreclosures through efforts like the Home Affordable Modification Program, or HAMP.
The next worry is commercial real estate, or CRE, which has been hit hard by vacancies fueled by rising unemployment. Banks could lose $200 billion to $300 billion on CRE loans, according to a February report by the Congressional Oversight Panel — a watchdog for the government’s $700 billion Troubled Asset Relief Program. Read about COP’s warning.
“Regulators are concerned about a looming wave of maturing commercial real-estate credit in 2010 and beyond,” Todd Hagerman, a banking analyst at Collins Stewart, said in an interview. “To get ahead of that, they want banks to become more active on restructuring these loans now.”
If banks successfully restructure a loan, the risk rating drops and they don’t have to set aside as many reserves on such assets, he elaborated.
“Some investors cry foul, arguing this is another version of ‘extend and pretend,'” Hagerman added. “But the economy is improving and this gives more time for borrowers to get back on their feet.”
$41 billion
Publicly traded U.S. banks and thrifts had more than $41 billion of restructured loans that they deemed performing at the end of September, according to SNL Financial data analyzed by MarketWatch.
Citigroup Inc. had almost $12.5 billion of performing restructured loans on Sept. 30, accounting for 1.91% of the giant bank’s total loans and leases, SNL data show.
Redefaults
These loans often aren’t included in nonperforming assets, a closely watched measure of credit problems. That may give a rosier view of credit quality in the industry.
But this may not last because restructured loans can redefault later, falling back into nonperforming status.
“The redefault rate is very high so we’re pretty cautious about the future performance of restructured loans,” Fred Cannon, a banking analyst at Keefe, Bruyette & Woods, told MarketWatch. “Bankers try and it’s worth making the effort, but it doesn’t always work out.”
Last year, the Federal Reserve Bank of New York studied subprime-mortgage modifications in which monthly payments were “meaningfully reduced.” The study, published in December, found that roughly 57% of the loans redefaulted in the first year — a rate it described as “distressingly high.”
‘A degree of hope’
Publicly available information about loan restructurings, or workouts, in the commercial real-estate market is “extremely limited,” so it’s tough to analyze whether such efforts are succeeding, the Congressional Oversight Panel said earlier this month.
Of almost $140 billion of troubled commercial-mortgage assets in the United States, $17.1 billion worth have been modified in some way, COP noted, citing data from research firm Real Capital Analytics.
“Lenders have an incentive to work with borrowers, where possible, to delay, minimize or avoid writing down the value of loans and assets,” COP said. “The hope is that the economy will improve or that commercial real-estate loans will not be as problematic as expected.”
However, if the commercial real estate market doesn’t rebound as quickly as lenders expect when they restructure loans, re-default is likely, the watchdog added.
Construction-loan workouts often involved “a degree of hope” that the market will turn around pretty quickly, according to COP.
“Supervisors bear a critical responsibility to determine whether current regulatory policies that attempt to ease the way for workouts and lease modifications will hold the system in place until cash flows improve, or whether the supervisors must take more affirmative action quickly … even if such action requires write-downs (with whatever consequences they bring for particular institutions),” it said.
“They must be especially firm with individual institutions that have large portfolios of loans for projects that should never have been underwritten,” the watchdog stressed.
Went to an open house in my neighborhood in Carlsbad over the weekend. Was greeted by a nice woman who said she was an agent doing a favor for a friend. Immediately was told it was a short sale and had termite and mold issues. There was an offer from another agent and investment group of $510,000 already on the house.
This is in a neighborhood where homes had typically been going for $650,000 and up. This house is a wreck and needs lots of work. But if it goes for this price or close will shake up some owners nearby.
Interestingly, the woman who was running the open house said she lived right across the street. After I told he what my rent for a house in the neighborhood was – $1800 – she sighed and said if only her mortgage was anywhere close. She pays about double and it a NEGAM loan! She should be paying more but can’t afford it plus her house needs a lot of work.
Every month she goes deeper in the hole. She said she’s thought about just walking but doesn’t think she will.
Wish it were like that in my neck of the woods – Irvine. Was shopping in Target the other day when a shopper down the aisle got a phone call, apparently from her real estate agent. Her end of the conversation went something like, “Yeah, oh, yeah, I’d like to look at that. Yes, let’s get over there this afternoon. Yes, and the other one, too, definitely. Yes, all cash offer.” I sighed and kept bargain hunting.
I rent in a condo tower in downtown Denver. Many units purchased for $700K in 2005 have hit foreclosure, with the remainder headed that way, including some purchased by the first wave of knife catchers. There is an ongoing lawsuit between the HOA and the developer which makes lenders even more leery than usual of financing condos, so that all current purchases have been cash transactions. They don’t sell quickly, but they do sell, and for cash.
There are plenty of current owners in the building who are between $100K and $400K underwater, as any buyer with an internet connection could discover in a few minutes on Cyberhomes and Realtytrac. My own unit sold 3 years ago for $700K, and could be purchased today for under $300K. At least a hundred vacant units lie within a 3-block radius. Yet there are buyers willing to write checks for these units. Fascinating. Particularly since they are purchasing them as rentals, at prices which above rental parity.
In their defense, this particular building is smack dead-center downtown, and quiet. And prices have plunged so much that I can understand them rationalizing that they can’t drop much further.
Yet I can’t imagine how anyone could see any possibility of appreciation within the next 5 years. This building has always been mostly rentals: it stood nearly empty the first year, because nearly all purchases were investors.
The stupidity is strong, and apparently only perceptible to a sliver of the population.
I am not a good investor, but, like many who read this blog, I seem to have a built-in mass delusion detector where real estate is concerned. I’m beginning to think that this is a case of “When the going gets weird, the weird turn pro”, as I stand apart from a society and watch it continue to cherish certain delusions. I may have found my niche. Perhaps it’s time to throw up my hands, admit that nobody will listen, and find a way to profit from the behavior of these fools.
Hunter Thompson…. great quote.
Kelija,
For $1800 monthly rent, what are you renting? House, SF, age, condition? Lawn care?
It sound like you have a good rental rate. P/R= $550,000/$1800 = 305 or Month payment at 5.2% plus taxes + repairs = 3000 + 500 + 300 = $3800 less 750 Sch A ded. = $3050 net expenses vs. $1800 rent.
IR, you may want to check out Calculated Risk:
FRANK:ASKS 4 TOP BNKS TO WRITE DOWN 2ND LIEN MORTAGES
FRANK SENT LETTER TO BK OF AMERICA,JP MORGAN,WELLS FARGO, CITI
FRANK:ASKS TO ALLOW PRIN REDUCTN MODIFNS OF UNDRLYNG 1ST LIENS
FRANK:LARGE NUMBER OF 2ND LIENS HAVE NO ECON VALUE
FRANK:2ND LIEN MORTGES NOW MAIN OBSTACLE TO LOAN MANY MOFIS
FRANK:MUST FOCUS ON PERMANENT MTG LOAN PRINCIPL REDUCTION
FRANK ASKS 4 TOP BKS MORE ACCURATE ACCNTG OF 2ND LIEN MTGS
Looks like Barney Frank is asking for principal reductions.
Sorry, it is Zero Hedge, not Calculated Risk.
Well after 4 years of renting in Woodbury and given some developments in my work situation I am ready to buy in this community. I love the new models – especially the Montecito 2A however I just can’t spend $800K+ on the mid-level Montecito when I can get 2,200 sq ft on a 3-yr-old house for $600k. This featured house just about hits my bid. I foresee a transaction sometime this year. Unfortunately I don’t have the reserves to buy from a Trustee so I am going to have to pay a spread to a flipper.