A New Wave of Mortgages Set To Default
September 14, 2009
I was surfing the web yesterday and came across this YouTube video of a 60 minutes episode that must have aired recently. The episode was concerning a new wave of adjustable rate mortgages called option mortgages. These mortgages grew in popularity the last few years due to its payment flexibility. A borrower can choose to make payments that are less then the interest due on the mortgage. From a borrowers perspective this seems like a great deal. But According to TheTruthAboutMortgage.com:
What many borrowers may not understand is that paying the minimum payment each month is simply a way of deferring the interest, not avoiding it altogether. By paying the minimum payment each month, the accrued interest eventually stacks up against the borrower, while effectively building zero equity. And after five years of paying the minimum payment, the borrower would have a loan balance above their original balance without the flexibility of the minimum payment option. попки порно онлайн
секс фото галереи порно онлайн смотреть фото
What’s even worse is that many borrowers are currently defaulting on their 3% teaser rates that haven’t even reset yet. What’s going to happen when the interest rates reset? And like other exotic mortgages, option mortgages were sold in mortgage back securities that were purchased by major financial institutions. We may not have seen the worst in the Real Estate market yet. There will be a sharp rise in distressed properties that will overwhelm the market in the next few years. What can we do as Realtors? If you aren’t dealing with Short Sales now, then my suggestion is you start. Because if this article proves to be correct, short sales will be here to stay for some time.
Comments
9 Responses to “A New Wave of Mortgages Set To Default”
Got something to say?
Polls
Loading ...
Shocking but true post. I’m sick and tired of people not doing their own due diligence and having tax payers pay their way. People need to fail & have their entire world flipped upside to learn. Learn what you ask? LIVE YOUR WAGE AMERICA!
Great comment Robert. i totally agree with you
many realtors aren’t into doing short sales or don’t know how. they’re gonna lose a big part of the business if they don’t learn quick. it really is a tool that every realtor should know, regardless.
That’s not a comforting thought. Scores of homeowners who thought they’d cut a deal with their banks to sell their houses for less than their unpaid mortgages are seeing those agreements fall apart months later, contributing to the mounting foreclosures that threaten the housing market’s recovery.
Just 23% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 real estate agents by Campbell Communications. More than 90% of agents cited a slow response from the lender as the reason short sales were lost.
yes, I am agree with your point and option mortgages.
very nice post … thanks for share with us….
Thanks for sharing this, it still amazes me that people don’t understand this principle. If you are consistently paying the minimum payment, how do you ever expect to get out of you debt. I propose that we institute a nationwide initiative to have some sort of financial information course in public high school and colleges be a requirement. If the patents don’t understand this idea, how can we expect their children to understand this issue if they aren’t being educated about it?
I totally agree with you.thanks for share with us.
property
It’s kind of like making the minimum payment on a credit card ,only in a grander way, and letting the debt pile up to the point of where it is out of control.
Turns out this was a really bad idea, too many homeowners took loans they just could not afford. They slip into a loan base on interest only and adjusting rate, it was only a matter of time.