Will Borrowers Walk Away or Wait for Appreciation to Return?
- In Massachusetts only 6% did so in a 1992-2007 study
- But the situation is far worse today with 18% of all loans having negative equity and another 23% are nearly so
- LTV (loan to value) averages 66% nationally with 10 states at 75% plus
- Nevada and Michigan, negative equity borrowers exceed 80%
Coming Wave of Option ARMs (adjustable rate mortgages):
From 2009-2011, an estimated $1.88b in option ARMs will recast
Breakdown
- $80mm in Q4 2008
- $575mm total for 2008
- $804mm total for 2009
Specific Cases:
Countrywide
- 72% of borrowers were making lest than full interest payments
- 83% received loans with little or no documentation
Wachovia
- 45% of $122b in their loan portfolio consist of option ARM loans
Mortgage Payments Will Rise by 50% in 2010 and Double by 2011:
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