ProfessionalHFAnalyst's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/202452/comments http://seekingalpha.com/article/93836-the-problem-with-hedge-funds?source=feed#comment-246350 246350 Fri, 05 Sep 2008 12:39:24 -0400 http://seekingalpha.com/article/84118-bank-of-america-vs-banco-santander-whose-dividend-is-secure?source=feed#comment-240190 240190 Wed, 27 Aug 2008 12:35:53 -0400 http://seekingalpha.com/article/92891-the-long-case-for-ge?source=feed#comment-240169 240169 Wed, 27 Aug 2008 12:26:35 -0400 http://seekingalpha.com/article/91958-five-struggling-dividend-stocks-i-m-still-bullish-on?source=feed#comment-235927 235927 Thu, 21 Aug 2008 17:00:25 -0400 http://seekingalpha.com/article/90926-canroys-remain-attractive-as-oil-related-investments?source=feed#comment-230364 230364 Thu, 14 Aug 2008 12:59:59 -0400 http://seekingalpha.com/article/87356-the-housing-bill-uncle-sam-is-moving-into-the-spare-bedroom?source=feed#comment-216734 216734 A more realistic example of the $500k home.
(1) Home is purchased in 2006 for $500k, with $400k in mortgage and $80k in second mortgage, to avoid having to pay PMI (Standard trick that everyone did). Equity stake is therefore $20k.
(2) Home prices tick down 4% in 2007. Equity is already wiped out, but homeowner stay in house, figuring that market will turn around shortly and they will be able to sell at a profit as originally anticipates.
(3) Home prices fall hard in 2008, say 20%. Home now worth $384k. Prospects for recovery look bad. So homeowner sends keys to bank and walks away. Net: got to live in a nice house for 3 years at a cost of $20k of equity capital.
(4) Wait, govt steps in. Forces lenders to write off loand above 90% loan-to-value. Since home is worth $384k, 90% of that is $345k. Second mortgage issuer gets wiped out 100%, losing $80k. That should have been written off by now anyway. First mortgage holder therefore takes hit from original $400k loan to $345k, i.e. $54k. Government now issues loan to you for $345k, 30 yr fixed rate. Not clear so far if the govt pays some of that $54k loss to the mortgage originator to entice them into doing this deal. But net-net, you got a big bonus for overleveraging yourself and living beyond your means. ]]> Mon, 28 Jul 2008 15:03:37 -0400 A more realistic example of the $500k home.
(1) Home is purchased in 2006 for $500k, with $400k in mortgage and $80k in second mortgage, to avoid having to pay PMI (Standard trick that everyone did). Equity stake is therefore $20k.
(2) Home prices tick down 4% in 2007. Equity is already wiped out, but homeowner stay in house, figuring that market will turn around shortly and they will be able to sell at a profit as originally anticipates.
(3) Home prices fall hard in 2008, say 20%. Home now worth $384k. Prospects for recovery look bad. So homeowner sends keys to bank and walks away. Net: got to live in a nice house for 3 years at a cost of $20k of equity capital.
(4) Wait, govt steps in. Forces lenders to write off loand above 90% loan-to-value. Since home is worth $384k, 90% of that is $345k. Second mortgage issuer gets wiped out 100%, losing $80k. That should have been written off by now anyway. First mortgage holder therefore takes hit from original $400k loan to $345k, i.e. $54k. Government now issues loan to you for $345k, 30 yr fixed rate. Not clear so far if the govt pays some of that $54k loss to the mortgage originator to entice them into doing this deal. But net-net, you got a big bonus for overleveraging yourself and living beyond your means. ]]> http://seekingalpha.com/article/84055-stocks-to-buy-before-the-oil-bubble-bursts?source=feed#comment-200900 200900 Tue, 08 Jul 2008 16:28:58 -0400 http://seekingalpha.com/article/84074-airline-stocks-where-value-investing-takes-flight?source=feed#comment-200818 200818 Tue, 08 Jul 2008 14:32:06 -0400 http://seekingalpha.com/article/84118-bank-of-america-vs-banco-santander-whose-dividend-is-secure?source=feed#comment-200816 200816 Tue, 08 Jul 2008 14:29:42 -0400 http://seekingalpha.com/article/78235-bank-of-america-better-than-treasuries?source=feed#comment-176840 176840 Fri, 30 May 2008 13:10:39 -0400