The question we posed five months ago: “Forget Subprime, Will That Apply To Alt-A As Well?” The answer today (in short): Yes (and prime too).
∙ JustQuotes: Forget Subprime, Will That Apply To Alt-A As Well? [SocketSite]
∙ JustQuotes: Consider The Why, Not Just The What (“Project Lifeline”) [SocketSite]
∙ Paulson, U.S. Banks Forge Foreclosure-Freeze Deal [Bloomberg]
too little too late. He’s trying tho…
So Paulson says the worst is yet to come. Up to 2 million more ARMs set to adjust. How about some SocketSite nostalgia which frames this in the proper San Franciscan context?
I remember, maybe a year or so ago, certain posters here making predictions about the upcoming “reset tsunami.” They thought that when the Alt-A and prime loans adjusted en masse, the local market would come under serious pressure.
Those predictions were rebuffed by many who claimed that San Francisco was different, because we all have high incomes, and people here could afford the resets. Supposedly locals took out adjustable loans so they could funnel more money into smart investments, not to squeeze into places they couldn’t afford. Cash flow management sort of thing.
Guess we’ll soon know which forecast, if either, was correct…
It doesn’t matter. People can’t repay the loan at any real, positive interest rate.
Repeat after me, the asset needs to be re-priced.