What problem could be left in the Real Estate industry one must ask? What about payment option payments or negative am loans? That's right...noone has seen those reset yet. But the day is coming soon! Remember the appreciation so pay less than interest and it's applied to principle? That is the next big bust.
Luckily this wasn't pushed nearly as much as the ARM deals here in Panama City Beach Condo market..but it did happen none the less. Read below for more specifics, but it's kindof interesting and could be very dangerous for lenders!
Fitch Predicts Higher Rates Leading to More Defaults Because so many holders of pay-option loans have elected to make only minimum monthly payments in the last 24 months, credit rating service Fitch Ratings predicted Tuesday that a larger than expected group of home loans will reset in 2009 and 2010.Pay-option loans, also known as option adjustable-rate mortgages, let borrowers make a lower payment but can result in the unpaid portion being added to the principal balance.The firm expects that $29 billion in loans will be recast to higher monthly payments by the end of next year while about $67 billion in loans will reset in 2010. The firm estimates that these loans will cost the typical borrower an additional $1,053 per month. Many of these borrowers will end up owing more on their homes than the home is worth."The combined impact of payment shock, negative amortization, declining home prices and restricted availability of mortgage credit may leave many option ARMs' borrowers unwilling to continue paying their mortgage," Group Managing Director and U.S. RMBS group head Huxley Somerville said in a statement.Source: The Associated Press (09/02/2008)
What to do? Let us help you identify some of these options and the short sales that are soon to follow today. Simply fill out our online form at www.Panama-City-Beach-Florida-Condominiums.com and we can email you listing as they hit the market. Be the first to know about the Panama City Beach Condo short sale market before anyone else is aware!
Also visit us online to search the entire Emerald Coast at www.RandBCoastalRealEstate.com today!
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