Blown Mortgage - Latest Comments in Subprime loan performance stabilizes

Re: Subprime loan performance stabilizes

P. Jackson — Tue, 29 Apr 2008 23:44:31 -0000

Just b/c I take such joy in beating the major press to a story -- by a long shot:
http://www.housingwire.com/2008/04/24/in-batter...

I'm one of the few that gets the remittance summaries the day after they come out. :)

Re: Subprime loan performance stabilizes

morganb — Tue, 29 Apr 2008 18:13:02 -0000

right - the margin's on these assure that regardless of what libor is
at (excepting zero) the rate is going to be a couple of points higher
than the teaser rate.

Re: Subprime loan performance stabilizes

DK — Tue, 29 Apr 2008 18:09:56 -0000

Lets see, all those subprime 2/28 and 3/27's were tied to libor. So libor at around 3 plus a margin of 6 to 7% (standard subprime margins) equals 9 to 10% amortizing on the reset. That is an increase in payment from the 5 to 7% rates they started from. With the house values dropping from 100% LTV's manyof thhese loans are "underwater" so an INCREASING payment is not a good thing. Also, the second mortgage (20%) was probably a 15 year fixed......pretty expensive to start.

Re: Subprime loan performance stabilizes

DK — Tue, 29 Apr 2008 17:59:07 -0000

Isn't this the lull before the storm? I understand that a large wave of resets will occur during the summer resulting in a wave of "nonperformance" 3 to 6 months later..........I am so glad I sold ALL my bank stocks.

Re: Subprime loan performance stabilizes

John Wheaton — Tue, 29 Apr 2008 15:27:20 -0000

It's likely that existing Sub Prime 2/28 loan rates have adjusted based on the considerably lower T-Bill or Prime, or slightly lower LIBOR indexes. What closed 2 years ago at 7 percent has adjusted to 5% which was the Feds intention all along.