Skip to main content

View Diary: Conyers to Send Investigative Team To Downing Street ? (147 comments)

Comment Preferences

  •  Not the rule? (none)
    The San Francisco Chronicle had article this week about interest-only mortgages.

    Currently in the Bay Area, nearly 70 percent of the mortgages issues are interest-only.  SEVENTY PERCENT!  And, of course, most of those loans are variable rate.

    With the incredible sky-rocketing home prices, that  is the only way that many people can afford homes.  They have huge LTV ratios (90% is very, very common), they pay no principle, and they have variable rates that are low in the meantime.

    Which means that, in a couple of years, we could have unbelievable numbers of bankruptcies.  Interest rates rise, people can no longer afford their payments, and they're forced to sell their houses.  The market bubble has burst, and the house is no longer worth what it was when they bought it.  And because they had an interest-only loan, the sale price of the house will be much less than their debt.  Their only choice?  Bankruptcy.

    It could be crippling to our area's economy.

    Your president lied to me.

    by Oaklander on Sun May 22, 2005 at 10:47:16 AM PDT

    [ Parent ]

    •  OMG, this is unbelievable (none)
      Thanks for posting this. (BTW, I didn't mean to post O.T. stuff here ... thought this thread was in another diary.) Perhaps some KOSsacks who are real estate or financial experts can do a separate diary focusing on this. From the above link:

      "This is frightening, frankly," University of California, Berkeley economist and real estate expert Ken Rosen told the Chronicle. "I'm worried that more and more people are using (homes) as an investment vehicle and not as a consumption market, and that's true of the peak of housing markets."

      While acknowledging the potential risks of interest-only loans, California Association of Realtors economist Leslie Appleton-Young believes the mortgages are beneficial.

      "Given the performance of the housing market over the long-term, instruments that help people get into the housing market are a good thing," she said. (Interest-only loans fueling San Francisco Bay housing market, 05/20/05 - AP/SF Gate)

      Keeping a roof over their heads is another story.

      Bu'ush agenda: ein volk, ein reich, ein doofus!

      by Peanut on Sun May 22, 2005 at 11:07:28 AM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site