http://www.bloomberg.com/apps/news?pid=20601103&sid=aNoc4LFUSOKw&refer=us "...Prince Jones Jr. paid $170,000 a year ago for a six-room Cape-style home in St. Paul, Minnesota, financing it with an adjustable 30-year mortgage. Jones, 27, got a so-called sub-prime loan because he was a first-time buyer who is a self-employed barber, has debts and makes about $500 a week. He planned to refinance before December when his monthly payment could jump to $1,646 from $1,291, hoping a good payment record on this mortgage would secure a lower rate..." Ok, I am not a banker or a loanshark, but a $1,600 monthly payment for 30 years for a $170,000 home seems really really high. that is almost $600,000 in payments over the term of the loan. Either these facts are incorrect, my interpretation is bad or sub prime lenders make Tony Soprano look like a great deal.
ARMS will continue to reset throughout 2007, $1.5-$2 trillion worth of them, foreclosures are rising and will continue to rise for the next 12-18 months.
good thing the real estate markets bottomed...he'll probably be able to sell it next year for 500K and make a nice profit...
Hey, get this... was just speaking with my neighbor. He is foreclosing, also had a lot of credit card debt. His card debt was 38K, and the card lender offered to settle for a one-time payment of 22K to get it off the books! My understanding is that more people are just starting to blow off their credit, knowing that they'll never be able to repay. Incredible stuff underneath the surface here...
I think were just beginning to scratch the surface of what is yet to come. I have read statistics that show if a house goes into foreclosure that houses within a block or 2 usually lose around $10,000 worth of value overnight.
A $1600 on a $170,000 house isn't too bad if his insurance and taxes are escrowed into the payement. With good credit, in my neck of the woods, the payment would probably be $1400 including taxes and insurance on a 30 year fixed note. WTF is a guy making $500 a week buying a $170,000 house? I'm just trying to wrap my brain around how far my pity is supposed to go... Maybe a $100K townhouse or something... SM