Option ARM timebomb set to explode....

Really2

Seen this back on the list again.

Are they on a long fuse?

sabretoothtigger

Long enough to be placed in the Fed safe where no one will hear them explode I guess

bubblesmoney

U.S. Home Vacancies Hit 18.7 Million

Assuming four people per household, the U.S. currently has enough surplus housing to put the entire population of the U.K., with room left over for Israel.

got this from infectious greed blog

wonder how many of these 18.7 million homes are in mortgage arrears (assuming they have mortgages) and have option ARMs.

Generali

Did the ARM thingy go off yet?

bubblesmoney

Generali wrote: »

Did the ARM thingy go off yet?

supposedly the more aged the whisky the better the kick. guess we'll find out sooner or later how good the tale is. 18 million vacant homes cant be a good sign anywhere

Really2

bubblesmoney wrote: »

U.S. Home Vacancies Hit 18.7 Million

Assuming four people per household, the U.S. currently has enough surplus housing to put the entire population of the U.K., with room left over for Israel.

got this from infectious greed blog

wonder how many of these 18.7 million homes are in mortgage arrears (assuming they have mortgages) and have option ARMs.

Interesting stats but do all the homes have 4 beds? Also are they all repos or are some "stock" houses?

sabretoothtigger

I saw a great deal yesterday on the tv, Miami flat sold for 500k in 2005 now sold for 32k with a really great view on the coast.
Looked good to me, apparently alot of sales are being processed with entire buildings bought by investment trusts for 90% discount

People will just have to rent these in future, that was the case previously so its just a change in trends

Really2

Well this bomb does not seem to be happening. Not judging by the 1/2 year profits being released today by the banks.

sabretoothtigger

How much money would they make without government intervention though and what happens when they have to stand alone. Thats the bottom line for years forward, the writeoffs can be underestimated and some of it will be hidden by changes in accounting to mark to model instead of market.

What I guess this means is the liquidity of the banks becomes stretched, in theory they have this debt which is still worth something but they might not realise its accounted for value for over 10 years or twenty or never if no one ever wants it as that can happen to land values especially in the usa with its bombed out post industrial centres.
So its not really tradeable to them, needs a comment from meredith whitney as she'd know whats bs

The bomb will still go off, but how well its contained is what'll be interesting to see. They just wanted to avoid dominos..


all sounds a bit similar to the zombie bank thing in japan but who knows.. I'd easily bet on low growth as least worst scenario

ad9898_3

Really2 wrote: »

Well this bomb does not seem to be happening. Not judging by the 1/2 year profits being released today by the banks.

I believe the whole of 2009 was the dip in middle, with subprime on one side (2007-8) and ARM's etc... on the other side (2010-2012), bank profits at this time are to be expected with the bank rate so low and bank lending rate relatively high.