Second Wave of U.S. meltdown starting about now.

Just in case anyone forgot,
Second Wave of U.S. meltdown starting about now.

:open_mouth: 70% of Option Arms might default?!


The characteristics of an Alt-A mortgage wouldn’t be unfamiliar to the average Irish broker or the mainstream lenders here.

  • Reduced borrower income and asset documentation (for example, “stated income”, “stated assets”, “no income verification”)
  • Borrower debt-to-income ratios above what would be “normal”
  • Credit history with too many problems to qualify for an “agency” loan, but not so many as to require a subprime loan
  • Loan to value ratios (percentage of the property price being borrowed) above at higher than “normal” rates.

Blue Horseshoe

That’s true and Hilarious, practically every mortgage made in most of the last decade in Ireland was in reality Alt-A or sub-prime.

Average Prime mortgage =
30 year fixed at about 6.5% ,
20% down-payment ,
no more than 30-33% of back end income (net disposable income) for mortgage payment.

My friend has a 100% , 35 year , 525k tracker(.9%) mortgage from AIB he got in may 2008,
The same type of house on the the next street in Sandyford is asking 350k and is still a ripoff.
A sure we just don’t have a sub-prime problem in Ireland that’s only in America. :angry:

Edit: I believe he could also have had interest only for the first 2 years. 8DD

This report, while still relevant, is from December 2008.

The second wave of resets are only starting to peek now in 2010 and for the next 2 years.

The theory is that the low interest rates now mean that interest rate resets on ARMs aren’t going to be a problem. I think there are a couple of problems with this.

  1. Refinancing a negative equity mortgage. The FHA has been looking at bending its rules to allow these to be qualifying and so cheap. ( … ative.html ).
  2. While ‘vanilla’ hybrid ARMs offer a fixed period followed by a floating rate are addressed by low interest rates, option and Cash flow ARMs are not. … M_Variants . In these cases, the resets are from a reduced payment to full amortisation (it is more properly referred to as a recast as the interest rate may not change, but the terms of repayment do).

See the wonderfully coherent CR for more details: … chart.html

Really was ludicrous when you look back on it, my brother got into a similar situation with the flat that he bought although on a lesser scale. Easy to say it now but the government should have regulated much more effectively.

Ever wonder why the reset graph falls off a cliff near the end 2012,
yep there are so few mortgages been issued now and over the last few years,
down 60 - 70%. How can they possibly stop the collapse of house prices with
such drops in lending no matter what government program they come up with.

That’s just pure unadulterated corruption !

Aha! By the time I saw the FDIC’s refutation of that video I’d forgotten where I’d seen it posted. Now that this thread has been bumped, I noticed it again. FWIW, here’s what the FDIC says: … share.html

It is a bank holiday weekend in the US ( Labour Day today). The New York Times has relentless probed the double leg of the dip in a series of articles over the past few days. Here is another version of the chart Arbitrager started the thread with. Look at the right hand scale :open_mouth:

Same data rebased to when subprime resets were still a problem

About 2 million houses will be seized by lenders through 2011. :open_mouth:

Ally’s GMAC Mortgage Halts Home Foreclosures in 23 States → … -n-y-.html

Interestingly this could be about a legal problem →

GMAC stops some evictions, foreclosed home sales → … wD9IBT5VO1 … arket/511/ … tgage.html