But the ARM scare is my new favorite. ‘What are all those poor ignorant folks gonna do when they adjust. Geez Louise Mytle, this is so stupid. There are two adjustments in an ARM loan. One is the yearly payment adjustment, the other is the dreaded ‘recast’ of the loan. I’ve been using these loans since their inception almost 20 years ago and have never had either one cause even a minor problem. This is no doubt due to the fact that I have an IQ significantly above room temperature.

The payment adjustment in the vast majority of ARM’s are limited to 7.5% annually. If for example your payment was $1K/mo. your adjusted payment would be a whopping $75/mo. higher for the next year. If that’s a problem, it’s obvious you shouldn’t have bought the property in the first place.

If recasting is on the horizon, there’s a simple solution. REFINANCE with a similar loan. I’ve done it several times over the years and not only didn’t have a ‘nightmare’ but lowered my payments in the process! Again, I’ve been doing this for almost 20 years, and will continue to do so.

As a matter of fact, I just did it for six homes in the Phoenix area that I originally purchased in 2002. Not only did I totally avoid any recasting, but I took more money out than I PAID FOR THEM IN THE FIRST PLACE. And since the vacancy rate has gone down to virtually nothing while the rental rates have shot through the roof, I’m still cash flowing nicely, thank you.

My final thought is this - If we really have so many idiots investing that they can’t figure this out, I think we’re in worse trouble than our ‘yawner’ is predicting.

I don’t understand your posting:
> You folks want to hear more doom and gloom. Why? For validation ? For advice on what to do next? BRILLIANT !

I want to read for understanding, like many other who came here, I assume. The high ratios of hous prices (and land prices) to income seemed irreal to me, either indicating a secular shift in how Americans see their homes or something else. The something else turned out to be borrowing running wild. Without option-mortgage the housing bubble would have run out of steam much earlier, maybe 2003, with less dangerous consequences for the rest of the economy. This was the first place where I read about it.

Suicide and assistance to it is now often tolerated as an realization of personal freedom - is this a reason that society tolerates also financial suicide of the fucked borrowers?

Why do you think it is BRILLIANT, even if you meant it ironic?

Regards,

Peter

You folks want to hear more doom and gloom. Why? For validation ? For advice on what to do next?

BRILLIANT !

I will keep this site up, and I will get a post up…..sooner than later.

I know it has been a while, but I have been all over the place. My territory with my new job is ALL of SoCal that is not LA. That is Orange County, San Diego, Riverside, San Bernadino, Palm Springs/Desert area, Temecula, etc.

I wish I could make blogging my ‘profession’, or make a business out of educating people on financial issues.

As far as your question, I don’t know how all this stuff is going to pan out. The world has NEVER lent money like it has the past 5 years and to borrowers of such shoddy credit, and at such high loan to values. I will talk to some of my friends and contacts still in the business and see if they know. I think we are still a bit premature for most people to be thinking like that. Everybody is still counting their appreciation and patting themselves on the back while holding an appraisal from 2004/2005.

I WILL get a post again soon.

Thanks for the comments, and check back periodically…it doesn’t take long to check a webpage to look for new content.

Stay tuned…

SoCalMtgGuy

You seem not to find the time to write here anymore, only occasionally on Ben’s blog. While I regret that, it is probably as well - with the soon expected arrival of the first YoY decline in median prices, the housing bust will even officially begin, and without appreciation, these option-mortgages don’t look so good anymore, neither for lenders nor for borrowers. Even mainstream media might then warn the uninformed buyer not to assume that appreciation will bail them out. What I wanted to ask you, however, is to leave your site available for readers, especially your comments to the mortgage madness. You might want to disable further writing, because maintaining a blog takes time, but your financial insight (from the inside) is the best I have read so far from the ground level of the financial side of the housing bubble. It is worthwhile to remember that is was not only buyers’ greed and naivite as in previous housing bubbles but a loss of sound financial standards on the lenders’ side that enabled the bubble to inflate so long. I have even one question for you about the coming downturn that I hope you will find the time to answer: I have read that the investor who bought a mortgage from a lender can force the lender to repurchase the mortgage under certain conditions, like a default on the payments in the first years. What are the standard conditions, and how widespread, do you think, will forced repurchasing be? Will it lead to the (deserved) bankruptcy of many lenders?

Regards,

Peter

Anxiously waiting for another post. Getting withdrawal symptoms

—————
http://www.latimes.com/news/local/la-fi-rent20jul20,0,5963850,full.story?coll=la-home-headlines What say you? is theforced rising of rents while the housing prices are still too much, coupled with rising …
—————

That article is talking about 100+ rental unit complexes. I’m sure the rents have gone up because many large apartment complexes were converted to condos the past few years.

I rent a condo from an individual. I think you can find better deals with more negotiating room if you go this route. There are lots of ‘investors’ that need tenants for the homes/condos they bought.

These people will rent for a ‘lower’ amount when faced with paying the whole mortgage themselves. I have friends that rented a place in Carlsbad for about $400 less than what the landlord wanted. After sitting vacant without a buyer or a tenant, the owner decided it was better to take a few hundred less a month than hold out for a price they realized they were not going to get.

Rents will continue to rise in ‘apartment’ complexes which will read to more ‘repartments’ (condo conversions that will convert back to apartments). There was an article regarding this happening already in Sacramento on Ben’s blog.

This thing is a LONG way from being over….

SoCalMtgGuy

What is your opinion on San Francisco, San Mateo County real estate market?

I’ve seen prices being reduced, however at the same time I see the real estate agents saying prices will not drop in this area because of the lack of housing.