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  • Alt-A Loans Spiraling Downward  [View article]
    Precisely. Glad you pointed this out. The LTV threshold has been hit WAY prematurely in many of these, and the 'reset' button has been pressed many more times than the chart shows. Most Alt-A type loans were CA, FL, AZ, NV, and those LTV's have been readjusted and loans reset, so ultimately the fall out is already taken or taking place.

    Another chart issue is that it doesn't factor the impending inflation that will rock our economy in 2009-2010. No way around it, the fix is in people. Good for real estate, but bad for $10 milk.


    On Dec 16 09:56 AM Pedro222 wrote:

    > A significant number of the Option ARMs have a provision for a reset
    > if an LTV (based on original value) cap is reached; which happens
    > if only the minimum monthly (negatively amortizing) payment is made.
    > Most people ended up only making these minimum payments. I don't
    > think this effect is fully captured in the CS chart you have, and
    > as a result we may be seeing far more "Alt-A" (in the broader -Fitch-
    > sense) resets than anticipated.
    Dec 17 12:30 pm |Rating: +1 0
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