Countrywide Home Loans Sends out a Frightening Letter to ARM holders
 

i sense a disturbance in the the force....


To head off potential problems, the largest mortgage originator in the United States, Countrywide Home Loans, quietly has begun sending out letters to thousands of borrowers who have been making only the minimum payments on the company's popular "PayOption" adjustable-rate mortgages.

The letters explain that "this is an early message to alert you that, based on your current payment trends and potential future interest rate changes, the monthly payment you will be required to pay may increase significantly."

A model letter provided to me by Countrywide includes this hypothetical example of what could be ahead for a California homeowner currently making only minimum payments monthly on a $402,000 loan.

The current full interest rate on the loan is 7.6 percent, but the borrower has been paying just $1,348.47, far less than what's needed to fully amortize the mortgage over its 30-year term.

If the loan reset at today's rates, the letter explains, the full payment required would be $2,887.50 - more than double what the homeowner has gotten used to paying. Future reset rates could be even steeper, making the potential payment crunch much worse. <<

See the full article: http://www.baltimoresun.com/business/re ? eadlines-1

All i can say is Cha Ching, time to put the vulture hat on and swoop in and pickup some great bargins

Yup - I held off during the wave of sillyness just for this to happen :glugglug

me too,waiting for the downturn:thumbsup

One of my houses is financed through Countrywide and our payments have gone up dramatically.

I was through this once when I worked in high tech and everyone leveraged the hell out of themselves.
With the historic low rates that where offered coupled with the fact that the banks lent out way to much to people it is coming again.

be careful. it could be a long, slow steady decline that takes years to work itself out like in Japan.

I'm so glad I just locked myself into a 30 year fix. Richard, you should talk to laurel she just helped John and I with our refi and got us into competitive loan.

I've never understood why anyone would take a adjustable rate mortgage. No way on Earth would I get anything but a fixed.

Its good for a while, I had prime + just had it locked in a month ago:winkwink:

Especially when they said rates hit a 40 yr low. Take any fixed you can get, obviously its going to go up. Its going to be ugly :Oh crap but like Mr.Sinister said there will be opportunity

You know all those insanely over done houses they built in SoCal and around Texas... well... pop goes the mortgage and here comes foreclosure and low, low sales costs.

Then the real money making is made.

what do you mean by over done houses in Texas do you mean over built as in too many on the market? I'm looking at buying some out there as there are a ton of foreclosures and the prices are cheap.

Why would you hold off? If you purchased 3 years ago, you could have locked a 30yr. fixed for 5.5% and the house has doubled in value!

And to answer the question why anyone would get an ARM - if you are buying property as an investment, you rent out your porperty for a couple of years, the value goes up and the rent sustains the mortgage and finally you sell!
(there are many more reasons and if you want to know ask me :thumbsup )

Yes there are many that got in way over their head, but the prices are not going to drop as much as people think. The market will correct itself.

Yes there will be many foreclosures, but the prices are not going to drop by 50%. Had you purchased a home 3 years ago, you would still be sitting on a ton of equity.

Now the people that took out HELOC's and spent the money on new cars or other luxury items are screwed!


:2 cents:

I agree rates will go up, and the market value in Cali (especially ) I can't say they will drop, but it they will level out... The real estate its self has gotten way out of hand.

OTOH, my HELOC is ajustable and right now it's at 9.75% and my mortgage company offered to lock it in at 7.5%.

There's lots of legitimate reasons for investors to use ARMs. Unfortunatly there's also a lot of newer home owners who abused them to finance over their head.

:thumbsup

"Though estimates vary, some industry experts say that at least a half a trillion dollars worth of loans with reduced initial payment terms are scheduled to reset during the coming year. "

Uh-oh

*pop* .....

:1orglaugh :1orglaugh

two fo my parents houses are thru them ;x and i am in the process of going thru them

should I jump ship?
no way i can afford double what they want me to pay already ;x;x;x

no just make sure that your Good Faith Estimate reads Fixed Rate if it doesn?t ask your loan officer to get you a fixed rate quote ... and if your fico is at least 660 you should still be able to get a good rate ?

Same shit is happening here - but actually probably worse.

Have a look for 'endowement mortage' on Google - its scary what happened.