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Thursday, December 31 2009 |
08:44 EDT |
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- Of the $189B securitized Option ARM loans outstanding, 88% have yet to recast, Fitch notes, and of those, 94% have used minimum monthly payments to allow their loans to negatively amortize. "Having not demonstrated their ability to make payments at the full rate, option ARM borrowers are at the greatest risk of default resulting from payment shock," firm says.
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This news story has 9 comments:
I am willing to stick my neck out and say the following:
WFC and BAC are going to need a HUGE gov't bailout to avoid collapse. Mark my words and at least I am not afraid to say it!
Give it another 16 months. You heard it here first!
Every once in a while you get a good dose of reality.
And the market is up & up & up & up, everythings Tickiity Poo....
were all 2006 loans the losses at most would be 30 billion and that
is not taking into account the writedowns that have occurred...as far
as Wells and Bac they took a hefty writedown on the option arms
they got from Wachovia and Countrywide....sorry no more bailouts....
Hint: the adverse stress test scenario covered this in detail if you
read the results on the FED website....
Read this unless you are a conspiracy theorist,birther,or truther....
read the results on the FED website....>>
I knoooowww. I believe everythingggggg I am told by the very same people who saw none of it coming.
anything from them....Roubini got it right but he also said the S&P
would be at 600 in October...
I take everything with a grain of salt. Especially from our gov't, FED, treasury, who saw none of it coming. There are various websites ie: Zerohedge, etc, that have put up charts showing just how bad the mortgage problem is "really" going to get in the coming 2 years.
The heading of the article states the truth, and does not even get into the leveraged involved, one of the big items that got all the banks into trouble in the first place.
Now before you get to carried away and think I am just so negative or short the market, let me be clear: I am not.
I still own my core Canadian stock holdings, corporates, high yield instruments, and treasuries. Some bought fresh at the market's march lows and some added to existing positions at those same lows. I believe in generating long term, consistent returns, that far outpace the market averages and avoiding what are now a series of never ending market bubbles and market crashes (2 since 1999) orchestrated by the Fed, their partner banks, the investment banks, et al. All I know is that as of today my portfolio is at 2009 levels where it should be while average American's portfolios are at 1999 levels. Yes, I will gladly say that some of it is luck, but most of it is skill, learned over the past 15 years investing, not gambling.
There is more than enough ample evidence out there that this mortgage mess has a long way to go and more than enough evidence out there that BAC & WFC (the 2 names i mentioned previously) are knee deep in the mess. Might as well include C in that as well. Though the news of the stress test is months old, there have been many articles written by smart, non cheerleading CNBC types, that the banks themselves wrote their own rules for the stress tests and the FED simply signed off on them.
Time will tell what the outcome is.
All the best to you.