The Second Wave

[deejayoh]

I think the bigger distinction, especially for "Wave 2" is between Alt-A and "pay option" ARMS.

Mr. Mortgage did quite a write up on this issue a week or so ago

http://www.doctorhousingbubble.com/opti ... lt-a-wave/

[TJ_98370]

.
Excellent article, DJO. Well worth the read IMO.
.
The one chart indicating that option ARMs will recast at a peak of $36 billion in the first quarter of 2011, with an average monthly payment increase of 80%, is a real eye-opener! How can that be good in a market with declining real estate prices? People are going to walk if they are underwater, en masse! ---- Am I looking at this situation wrong?

[mukoh]

DJ,
Would love to see some great stats on what % of these SUPER SECOND WAVE loans have already been refied, gone back, foreclosed, renegged and or got modified. Have not been able to find it.

Local bank/lenders have interesting figures, not public though.

[TJ_98370]

.
For what it's worth, the chart below is what I was referring to in my previous post. It is from the article to which DJO posted a link -
.
If you read the fine print, loans that are paid off early (refied?) have been excluded.
.

[jon]

That graph looks like about $220B of mortgages. If they are $200K on average, that is about 1 million houses. At the current rate of 4.5 million sales per year, it is about 3 months of inventory spread out over 30 months. By comparison, there were 1.3 million foreclosures in 2007, and total losses for mortgage backed securities was $435B as of July 2008. So it appears to be a somewhat smaller hit spread out over a longer time. With new construction way down, there may be enough demand by then to absorb those houses. Those underwater owners won't be buying anytime soon, but they will be renting.

[rose-colored-coolaid]

[FreedomLover]

[rose-colored-coolaid]

[Charles Dean]

Housing has always been considered an asset. For most people it's usually the most valuable single asset people have, as well as the mortgage attached to said asset being the largest liability most people have as well.

Why wouldn't you have a "market" for "assets"?