pochovilla

12 Observations on Residential Housing

Dave: The next time someone mentions which inning are we in just say it's the World Series and could go to 7 games.

Mortgage Resets: Subprime May Be Ending, Option ARMs Have Just Begun

Herb: I'm puzzled as to why you even go on the Kudlow Klown show. I watched the "show" and looked at the chart on resets. At first glance there is some truth to the interest argument making monthly payments more attractive. But there are people who couldn't afford the loan in the first place. It seems to me that Kudlow has an answer and finds some chart to prove his point and as far as he is concerned the discussion is over and "goldilocks" marches on. But I would believe the issue is much more complex than a simple reset chart. Does anyone have a handle on real data? I have seen data from 1/1/06 to 6/1/07 (Amherst Securities Group, LP re: purchasing power) that suggests $40K pretax incomes 55% debt/income was providing borrowing power in excess of $340K. It seems to me anything beyond 3.5x $40K = $140K generates trouble even at fixed rates particularly with inflation in real estate taxes, insurance, power and most consumer non-discretionary purchases.