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news · Joined: 14 Jul 2007 Posts: 0 Location: Greater Boston

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Description: Subprime relief: Winners and losers
URL: http://www.bankrate.com/brm/news/mortgages/20071203_foreclosures_rate_freeze_a1. ...truncated...
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spork · Joined: 23 Oct 2007 Posts: 25

just some rambling thoughts...

I am surprised there hasn't been more coverage on how BS this subprime ARM rate freeze is. What is the point of risk and free mkts? let's just change the rules of the game during play...if things don't go the way some want it to. So those who have been priced out of the mkt (at least to what they want to buy) and have waited patiently for things to turn around have to pay for the ignorance of others...

My guess is because that in part, 65%+ of people in the US own homes and many poeple, especially baby boomers close to retirement, are losing mega $$$ in the stock mkt (the housing correction and its effects on the broader economy-higher probablity of recession soon if not now).

Does this move change the game significantly? Will this effect what price the bottom of the mkt will be (little higher)? Does this slow down the price drops significantly and/or just extend the correction longer? what do you think?

And of course, is implementation of this possible? Probably yes? because something sweeping like this is easier than working out the mortgages one by one? cheaper to keep people in there homes than to foreclose at these record numbers?

admin · Posted: Thu Dec 06, 2007 11:47 pm GMT Post subject:

My guess is that the freeze will slow down the correction, make it last longer, and make the eventual decline deeper in real terms. I think it will stretch out the time frame by preventing or delaying some foreclosures, which will in turn help to keep the inventory from spiking all of the sudden. Conversely, I think it will drive down prices because lenders will be much more cautious about who they lend to and probably pad their rates higher in anticipation of future intervention. Of course, this is all conjecture on my part.

- admin

spork · Joined: 23 Oct 2007 Posts: 25

good point, that's a possibility. I guess it depends how much wiggle room they have with their monthly bills in the end. Since they are subprime you would assume that most are probably playing it close to the vest.

Will the 2-5 year freeze allow them create enough spread between their monthly debt and income to be able to absorb the next reset and avoid forclosure altogether? i guess time will tell.