San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists » liar’s loan http://www.sanjoseshortsaleagent.com Avoid Foreclosure and save your family's credit and dignity. Sat, 28 Jan 2012 01:59:34 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Resetting of Alt A loans in the coming 24 months http://www.sanjoseshortsaleagent.com/2009/10/21/resetting-of-alt-a-loans-in-the-coming-24-months/ http://www.sanjoseshortsaleagent.com/2009/10/21/resetting-of-alt-a-loans-in-the-coming-24-months/#comments Thu, 22 Oct 2009 00:07:30 +0000 admin http://www.sanjoseshortsaleagent.com/?p=407 I have been talking about the problems brewing in the Alt A and more specifically about Option ARM loan markets.  Alt A loans reside between prime and sub-prime loans in terms of credit risk from a lender’s perspective and are characterized by the lack of documentation or proof of assets; they were often called Liar’s loans.   A good explanation of Alt A can be found in this article.

CAR’s data regarding activities in Sub-Prime and Alt-A loans for 2009 revealed some disturbing trends in the coming months.

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Look at the numbers of Alt-A loans out in the market: 632,215 or 5% of all loans in California. And of those, 70% are ARMs or adjustable rate mortgages – meaning their teaser rates will reset some time in the future.   The bulk of the Sub prime mess has already reset and in the coming future only a small number is scheduled to reset in the next 24 months (15.6%).  But look at Alt-A by comparison.  Only 46.9% have already reset and look at the bomb that is ready to reset within the next 24 months as of May 2009!  40.4%! Unfortunately, there were no dollar figures associated with this graph. And buried in that number is the truly toxic Option ARM which is almost a guaranteed foreclosure simply waiting to happen. If people think the sub-prime mess is over, they are probably correct.  But look at the beast that  is coming down the road; we may only be half done.

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