June 07, 2007

In Come the Waves: Try to internalize this Adjustable Rate Mortgage Reset Schedule.

Teaser rate ARMs didn't seem like a bad idea at the time, because that really friendly mortgage broker who cared so much about you said when the rate reset, you could just take out another ARM and also take out more cash!


Oops. Didn't quite work out that way.

And now millions and millions of Americans will lose everything.

Thank you mortgage brokers of America! Thank you Alan Greenspan! Thank you commission-junkie realtors! Thank you corrupt appraisers! Thank you greedy homebuilders! And thank you Americans for being so gullible, greedy and financially ignorant.

30 comments:

raynla said...

Kieth,

Casey is back up to bat!

www.iamfacingforclosure.com

Anonymous said...

What is the start date for this chart? I.e. where are we now on the time continuum depicted in the chart?

Anonymous said...

I had to take a motion sickness pill just to look at the chart

keith said...

chart starts from January 2007

Anonymous said...

I've seen this chart before but I still don't know how to read it. What does the X axis show? Is that months starting from January, ie is the bar on 5 showing June 2007 ARM resets. Or is that number of months that the ARM will set from when the ARM was taken out?

If it's the former then it looks like we're about to be in peak ARM reset which would mean peak foreclosures should be hitting us in about 6 months.

If it's the latter I don't know what that means going forward. That big bulk of ARM resets could have already taken place last year for all I know and the chart was just created in January 2007 showing the past 10 years worth of data.

Anyone know for sure?

keith said...

It shows that hundreds and hundreds of billions of dollars of junk loans will be resetting in the next 24 months

we're just getting started

Anonymous said...

how do you know that's what it shows? all it says is data as of January 2007. That could mean the data was gathered in January. Could be historical data for all you know.

Anonymous said...

Just wait until a rout in the bond market sends interest rates up. Then the real fun begins...

Anonymous said...

Looks like 5 years if fun (from Jan 2007) with a breather at the 2 year mark....

Marky Mark

Anonymous said...

Looks like plenty of forclosures and pain over the next 60 months.

Guy Daley said...

Doh! Its true, somebody else had posted the link with a "You are here" arrow on it." It was much clearer and self explanatory.

That's okay, everybody has seen that graph anyway and we get the point.

The bulk of resetting ARMS are yet to come. We need a thread on how to profit from this debacle. Its almost hard to choose which part of the country is going to be hit the hardest. Detroit and Michigan has a HUGE head start but I think Florida is going to overtake the rest of the country because they have more condos and houses in the pipeline than any other place in the country and the pressures of insurance, property taxes and highest rate of vacancies makes it a quadruple whammy.

Haha, not to mention if they get socked with another hurricane this season.

Anonymous said...

What the chart shows is that Subprime will not bleed over into Alt A, Option ARM's are always a good deal, there IS no housing "bubble" and mortgage brokers acted ethically at all times. Sheesh. Isn't that obvious?

DinOR

Anonymous said...

Tsunami of foreclosures coming!

I would like to see a time line chart of this:


ARM reseting from low teaser rate - check

Credit cards maxed out - check

House value decreasing - check

House foreclosed - check

Wife leaves with the gardner and files for divorce and takes the kids - check

life ruined - check

loaded pistol in mouth - check

Anonymous said...

Actually a big hurricane wiping out South Florida is probably what they need. Otherwise, close up construction for years. All the homes you will ever need are already built.

Anonymous said...

REMEMBER:

This chart is only accurate out to month 24. From that point forward they have not booked the 2/28, 3/27 or 5/25. Also, some of those will recast sooner if it is Hybrid or Option ARM when they reach Max CLTV. This chart only gives us a faint idea of the reckoning we have in store.

Also, these people coming in for refinances have a surprise in store when they no longer qualify: Stated, DTI, LTV (upside down on mortgage). Foreclosure about to grow exponentially.

Bring the pain.

Anonymous said...

Here's how to read it.

1. From now til the end of 20008, the bottom falls out as all the subprime loans given to poor people and "investors" wipe out the bottom 1/2 of the market.

2. From January 2010 til January 2012 the TOP HALF of the market gets wiped out. All those people with decent jobs and good credit that bought "Options ARMS" realize their bet has gone wrong.

That $800k "American Dream" house that they bought with that option arm their broker told them they could just refi out of when it reset? Well,

-it's dropped $100k in value.
-the $1500 minimum they've been paying on their option arm over the last 5 YEARS has caused their balance to increase by $100k.
-the ARM resets 3 points higher

As a result their $1500 payment increases to, and this is serious, $8,000 PER MONTH (look it up $900k at 8% for 25 months plus 1% taxes). Millions of middle and middle upper income families watch their life savings disappear.

So long middle class and the American Dream.

Anonymous said...

Surf's up dude!

Wipeout!

K.W. - Southern Ca. said...

It's the former ... meaning the wave to peak forclosures is now in it's early stages.

This will not just be isolated to subprime ARMS though, the true ripple effects across the entire economy will be seen in the months ahead.

This is just the tip of the ice-berg.

~~

I've seen this chart before but I still don't know how to read it. What does the X axis show? Is that months starting from January, ie is the bar on 5 showing June 2007 ARM resets. Or is that number of months that the ARM will set from when the ARM was taken out?

If it's the former then it looks like we're about to be in peak ARM reset which would mean peak foreclosures should be hitting us in about 6 months.

If it's the latter I don't know what that means going forward. That big bulk of ARM resets could have already taken place last year for all I know and the chart was just created in January 2007 showing the past 10 years worth of data.

Anonymous said...

What are:

"Agency ARMS"

&

"Unsecuritized ARMS"

Thank you.

K.W. - Southern Ca. said...

There are many factors (beyond what the chart can show) that determine the extent of which ARM resets will effect the other mortgage areas - and they will.

We'll only know what *really* happens in the other areas as
well in the coming months.

Anonymous said...
What the chart shows is that Subprime will not bleed over into Alt A, Option ARM's are always a good deal, there IS no housing "bubble" and mortgage brokers acted ethically at all times. Sheesh. Isn't that obvious?

HauspocalypseNow said...

set graph as desktop background to remind you over the next few years of why to wait.

especially if you are buying a more expensive home, there will be a huge huge oversupply of them, it seems like thats all theyve been building.

K.W. - Southern Ca. said...

Right on.

There will be big losses for everyone, across all income brackets.

A good majority of those who will be able to keep their homes will be working mainly to pay off the ever increasing debt for a longer period of time - and moving to a bigger (more expensive place) will
not be an option.

Anonymous said...
Here's how to read it.

1. From now til the end of 20008, the bottom falls out as all the subprime loans given to poor people and "investors" wipe out the bottom 1/2 of the market.

2. From January 2010 til January 2012 the TOP HALF of the market gets wiped out. All those people with decent jobs and good credit that bought "Options ARMS" realize their bet has gone wrong.

That $800k "American Dream" house that they bought with that option arm their broker told them they could just refi out of when it reset? Well,

-it's dropped $100k in value.
-the $1500 minimum they've been paying on their option arm over the last 5 YEARS has caused their balance to increase by $100k.
-the ARM resets 3 points higher

As a result their $1500 payment increases to, and this is serious, $8,000 PER MONTH (look it up $900k at 8% for 25 months plus 1% taxes). Millions of middle and middle upper income families watch their life savings disappear.

So long middle class and the American Dream.

Anonymous said...

Anonymous June 07, 2007 2:25 PM said...

loaded pistol in mouth - check
------------
Sometimes the decorum of this forum really crosses the line.

g said...

"Sometimes the decorum of this forum really crosses the line. "

Uhhhh, yeah. Doesn't the headline say "....with an attitude problem"???

If you want to play nice go somewhere else. Us HPanic-ers prepare cold hard truth.

Anonymous said...

Cowabunga!

Raphael
TMNT

Ackafoo said...

g said...

"Sometimes the decorum of this forum really crosses the line. "

Uhhhh, yeah. Doesn't the headline say "....with an attitude problem"???

If you want to play nice go somewhere else. Us HPanic-ers prepare cold hard truth.
-------------------------
Lawl, truth is in the eye of the beholder. You spin a number as negative as possible to make yourself feel better about never being able to afford the home you feel "entitled" to. The gov't/NAR/etc spin it as positively as possible to try and prevent a panic, as people are sheep. Somewhere in the middle lies the truth.

Anonymous said...

"Lawl, truth is in the eye of the beholder. You spin a number as negative as possible to make yourself feel better about never being able to afford the home you feel "entitled" to. The gov't/NAR/etc spin it as positively as possible to try and prevent a panic, as people are sheep. Somewhere in the middle lies the truth."

Ladies & gentlemen, a true homedebtor-hamster has exposed himself as being somewhere on that graph.

It will be a nasty xmas this year, indeed.

Now, for the people who whines that HPs are too harsh from time to time, go talk to Giuliana or Karl Rove because they have sweet tales to tell you.

May I suggest an alternative name for Keith's site? "The House of Pain"

PS: The majority of HPs were home owners who sold at bubble peak. And by looking at that graph, we could afford 3 million dollars worth of homes, just like the Russian crook Casey Serin did, capice? However, we HPs are neither scam artists nor financially stupid.

Anonymous said...

I echo the above comment. If you live within your means and don't have the leased or rented "bling" you don't have "it"

but when I'm retired at 45 sitting on my yacht shooting it in your girl's tw*t, I'll be having plenty of "it"

shakster said...

Thank you mortgage brokers of America! Thank you Alan Greenspan! Thank you commission-junkie realtors! Thank you corrupt appraisers! Thank you greedy homebuilders! And thank you Americans for being so gullible, greedy and financially ignorant
-------------------------------------Kieth,I think your being a little rough here. NOT!
Especially the last sentence.

Anonymous said...

Anyone with an ARM should try to sell the home when the ARM resets. If they can't sell it at breakeven or profit, just mail in the keys. It's not worth killing yourself and going to the poorhouse over a stucco box. Let the foreign investors eat the loan.