Comments on: Subprime loan performance stabilizes

By: P. Jackson

P. Jackson — Wed, 30 Apr 2008 01:44:31 +0000

Just b/c I take such joy in beating the major press to a story — by a long shot:
http://www.housingwire.com/2008/04/24/in-batter...

I'm one of the few that gets the remittance summaries the day after they come out.

By: morganb

morganb — Tue, 29 Apr 2008 20:13:02 +0000

right – the margin's on these assure that regardless of what libor is
at (excepting zero) the rate is going to be a couple of points higher
than the teaser rate.

By: DK

DK — Tue, 29 Apr 2008 20:09:56 +0000

Lets see, all those subprime 2/28 and 3/27's were tied to libor. So libor at around 3 plus a margin of 6 to 7% (standard subprime margins) equals 9 to 10% amortizing on the reset. That is an increase in payment from the 5 to 7% rates they started from. With the house values dropping from 100% LTV's manyof thhese loans are “underwater” so an INCREASING payment is not a good thing. Also, the second mortgage (20%) was probably a 15 year fixed……pretty expensive to start.

By: DK

DK — Tue, 29 Apr 2008 19:59:07 +0000

Isn't this the lull before the storm? I understand that a large wave of resets will occur during the summer resulting in a wave of “nonperformance” 3 to 6 months later……….I am so glad I sold ALL my bank stocks.

By: John Wheaton

John Wheaton — Tue, 29 Apr 2008 17:27:20 +0000

It's likely that existing Sub Prime 2/28 loan rates have adjusted based on the considerably lower T-Bill or Prime, or slightly lower LIBOR indexes. What closed 2 years ago at 7 percent has adjusted to 5% which was the Feds intention all along.