The above photo has nothing to do with this post, at least not as far as we know, but some of our posts are generic and do not feature a property so there is no particular photo to go with them.
… 93 percent of option ARM borrowers decided to go with the negative amortization option otherwise known as the “minimum payment” option.
Yet one of the new findings in the report was that 78 percent of all outstanding option ARMs have yet to hit major recast points. Given that 58 percent of option ARMs are here in California, this is a one state wrecking ball:
So deep are these loans in negative equity territory that not even HAMP can save them.
Thank goodness for Dr. Housing Bubble and his/her willingness to do all the reasearch neccessary for articles like, “Option ARMs Come Back into Center Stage: 350,000 Active Option ARMs with Over 200,000 in California. 78% of Option ARMs Have Yet to Hit Recast Dates“.
Just curious. Is there anybody who thinks the upcoming recasting of Option ARMs will have little to no influence on home prices in the near future? Please, state your opinion. I promise that neither Delroy or I will write anything derogatory in response. In fact, I will not even respond at all. You have an open forum.
John Crandall
November 30th, 2009
Hey,
My name is John Crandall, and I’m the reporter who covers Coto de Caza for the Orange County Register. I’d love to talk to you some time and get your thoughts about real estate, Coto or just anything in general. You can reach me at 949-454-7308 or jcrandall@ocregister.com or twitter.com/newsguy777 or facebook.com/newsguy777. Thanks for your time.
C Delroy Spuckler
November 30th, 2009
One other thing to look at would be the LTV of the loans.
My uneducated guess would be like most things recently in real estate, it will vary locally. I’m guessing certain areas the concentration of option arms is very high compared to others. So you’ll see those areas get hit, but not the rest of the market. It looks like that’s in general how these “waves” are hitting. Some places the REOs will just replace the organic inventory that is locked out due to little equity, other places it could be significant enough to impact prices.
At some point then a few years from now there will need to be some consolidation. There are gaps between various neighborhoods. There always has been (the “Irvine Premium” for example) but it seems like this has become more pronounced recently in some cases. At some point the “move up premium” won’t be justified and you’ll see the market adjust. I expect this will be a much slower mechanism though, and we’re already seeing some of it now.
Trinity
November 30th, 2009
I think lots of people are still in denial about the value of their house. Many seem to still think that 2007 prices will soon return after the foreclosure on their street finally sells. Do they not realize that for every house they see as bank-owned, there are even more in which the owners are not making payments?