Skip to main content

View Diary: Seismic mortgage market event today (80 comments)

Comment Preferences

  •  Isn't it just a wall more than a wrinkle? (2+ / 0-)
    Recommended by:
    Ray Radlein, The Termite

    So I understand: at this moment, you as an originator can't go into the credit markets to fun anything much different than 20% equity, fixed rate.  And these markets are skeptical about the real value of what's there, so to refi one of these, there's going to have to be some substantial cash collateral.

    How are the banks going to cope with mass walk-aways that result?  It seems like many simply won't have the liquidity, and some fraction of those who do will stick it in a 401k and still walk away.

    Ortiz/Ramírez '08

    by theran on Thu Mar 06, 2008 at 11:11:42 AM PST

    [ Parent ]

    •  You can still do.. (3+ / 0-)
      Recommended by:
      Ray Radlein, theran, KenBee

      ...an 80-10-10, (10% HELOC, 10% downpayment) but it's no longer advantageous to paying MI (mortgage insurance).  And to qualify, you need sterling credit.

      I don't know how investors will cope.  At this point it's too early to tell what this means for default rates.

      "Some folks look for answers...others look for fights."

      by The Termite on Thu Mar 06, 2008 at 11:13:18 AM PST

      [ Parent ]

      •  Just so I understand (1+ / 0-)
        Recommended by:
        Ray Radlein

        Here is the confusing things.  The borrower owes N, but the house is worth n < N now.  To refinance, this person needs .2*N-.1*n dollars and very good credit (or just .2*N), right?  

        Whereas if n > N, then the refinance becomes possible without a big injection of extra cash, but the payments will get bigger in some way.

        The first scenario seems very bad all around.

        Ortiz/Ramírez '08

        by theran on Thu Mar 06, 2008 at 11:20:30 AM PST

        [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site