I noticed this on the just posted article from theimbreport.com. The analysis they did on the 2/28 loans originated in the second half of 2004 is nothing short of mind-boggling:
"At reset, the remaining UPB was $291 million with a 30+ day delinquency percentage of 43% on the UPB at reset and 13% on the original UPB. However, as these loans aged an additional six months, a further 47% of these loans paid off (leaving a UPB of only $154 million or 15% of the original UPB) and the delinquency percentage fell to 31% on the UPB at reset and 9% on the original UPB..."
Remember, these loans got reset in Q3 and Q4 of 2006, when the real estate market was at its absolute peak. This means that out of all the 2/28 loans (ARM loans with a two year fixed period), 43% of them are delinquent! And this rate is still 31% 6 months later!
To translate the above into layman's term: If you are a home buyer in late 2004, when the market was STILL not as crazy as 2006, and you chose a nice, low monthly payment ARM loan, then it is highly possible (43% odds) that you will not be able to afford it after the rate is reset.
This is almost a doomsday scenario for any average home buyer. Imagine: Are you going to buy a house if you know 1 out of 2 chances you will not be able to afford it 24 months down the line? Worse, if you can not somehow refinance it or sell it before the monthly payments crashed you, (which is probably the case now a days), then you are looking at bankruptcy in its eyes...
This is just crazy... Am I missing something?...
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