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The return of interest-only mortgages

The return of interest-only mortgages

Robert Loftus
March 2, 201Interest Only mortgages are one of the most toxic mortgage products out there. They make banks into property holding companies rather than lenders - but as we saw from the RE crisis, banks are not equipped to function as property management firms. These kinds of products should be illegal, and banks should at least be required to form Real Estate holding companies that are equipped with means to cover costs on and perform physical maintenance on these properties in the event of a default. Any investor who purchases shares in a financial institution that`s offering these products is bound to lose money eventually.

Anthony Matteo Russel James Canavacciulo Monterubb
March 2, 201funny, I haven`t seen a 4% interest rate in over 2 years. jumbo or not jumbo. Just shows the rich are getting ripped off by these lenders and banks . The rich need to just find a lender that only charges a point for their origination fee. then they wouldn`t have to resort to an interest only loan. Its all in the paper work. they just need to make sure they are doing borrower paid origination. make sure it is posted on the goodfaith estimate. This way they see all fees up front. since the lender can only get paid by one source. the bank or the borrower and not by both.


Adm Price
March 2, 201The best way to stop the bad practices of banks and financial concerns is to get HR 1489 enacted into law. H.R. 1489 (112th): Return to Prudent Banking Act of 2011 "To repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so-called "Glass-Steagall Act", and for other purposes." govtrack.us/congress/bills/112/hr1489

Vincent Wolf
March 2, 201Not only is it greatly exaggerated many US banks are deliberately playing a game of bait and switch and playing the same old tactics that got the US into trouble in 2006 and earlier. Some are offering `desktop appraisals` to circumvent appraisers killing their opportunities to push highly risky loans to applicants. Many are offering terms on a HELOC`s that are taken out at the same time as a refinance primary loan to offer 90% LTV loans. And then refusing to document the terms of the HELOC in the `best faith estimates` so they can circumvent the law and change those terms at will--before and after closing. And then they offer up interest only loans only to change this offer right before closing and telling the applicants sorry that`s not true we never offered interest only payments terms on the HELOC and then bumping up the payments by double or more and refusing to abide by their original offer of interest only payments. And that `you can use the HELOC funds for anything you want` offer? They changed that too right before closing and said the funds had to be used to pay off other loans (even if no lien, etc) with the proceeds after promising the funds can be used for anything. And then they lower the amounts of the HELOC to 80% LTV so that if the applicant wanted to use some funds for home improvements, etc as in the original promise--nope can`t do that either as they lowered the promised LTV from 90% to 80%. So the original offer was just a `sucker` offer in order to procure your business. So they lied. They pushed. They cajoled. They changed things. Again and again and make promises like `we can close in 3 weeks` and then after nearly 3 months of cajoling and fighting with them about the changed terms the applicant usually just tells them to go fly a kite that they were just guilty of `bait and switch` not keeping any of their original promises. Banks can all go to hell they are corrupt, crooked, and more like the mafia every day.

Adm Price
March 2, 201Gold ETFs see biggest ever monthly outflow BullionVault

Adm Price
March 2, 201The death of small banks in the US Daily Reckoning


Adm Price
March 2, 201Did Obama tax the US into recession? Mish

Adm Price
March 2, 201Obama-Congress paychecks safe from automatic budget cuts Bloomberg

Adm Price
March 2, 201Chairman Bernanke, price inflation is the least of your problems Forbes


Adm Price
March 2, 201$50 Trillion In Debt? How Far Can We Go? MarketWatch


mike long
March 2, 201anyone else having trouble believ`n these reports com`n out washnton and u mich, and nar, and the like?

rich collins
March 2, 201@mike long No, no trouble at all. They are all estimates from insufficient data till next month.

Adm Price
March 2, 201The US dollar is soaring and is now up to 82.27 on the DXY. Happy days are almost here again!

Bill H Illify
March 2, 20184....84...84...84....

rich collins
March 2, 201@Adm Price .42% is what you call soaring? It won`t last anyway.


Adm Price
March 2, 201 The dollar is headed to 90 on the DXY and then 100.


Doug Marks
March 2, 201Best means to take advantage of this real estate/interest market is to live within your means, lock in a 15 year fix and a historic low interest rate and make your money on paying down the principal. What I make as the house appreciates with the market is gravy. If you extend to live in a bigger house on an interest only, your just begging to be taken out at the knees when the next correctionn hits. Not a good time to stick youre neck out. About half of these great housing #`s we`re foreclosed properties and bagin hunting....not true appreciation.

Geno Bronzi
March 3, 201@Doug Marks Housed don`t "appreciate". Houses are depreciating assets.


This comment has been deleted Reversal Repeat
March 2, 201Who is playing with this dangerous market? I wouldn`t.

Susan Kachmar
March 2, 201@Reversal Repeat Thank you. I thought I was nuts thinking I had already read this piece.

Adm Price
March 2, 201Yep, this article is a rerun, Susan, and it`s today`s feature front page article...


Brain Williams
March 2, 201Re-direction, re-direction......(brought to you by the White House Puppets) Big bold letters.....should read Borrowing costs of the U.S. Government lead to the death of the U.S. Dollar. (as soon as interest rates rise)


Adm Price
March 2, 201The US dollar is headed much higher and will skyrocket when borrowing costs (interest rates) rise, contrary to your assertion, BW.


Brain Williams
March 2, 201@Adm Price My mistake, should have asserted the fact that the future of the $ as a reserve currency is in jeopardy (IMO) ft/cms/s/0/005370e2-1137-11e2-8d5f-00144feabdc0.html#axzz2MKA4ZoCD


Steven Severson
March 2, 201Is there a better location for the market comments than posts to an article regarding housing and interest only mortgages? ...just sayin

Reversal Repeat
March 2, 2010.41% rise of USD today suggests Fed will pause. Double top and triple top suggest market trend is negative. So, do not fight these.

Bill H Illify
March 2, 201Wait a minute I`m black and blue from fighting the FED and now you want me to call off the dogs?


Reversal Repeat
March 2, 201@Bill H Illify At this moment, I mean Fight the Fed --- Fed seems dying. Do not fight the tape --- the tape is negative.

Bill H Illify
March 2, 201Seriously ..watch for the big selling right at close of day.....happened last two...we shall see if today makes three.

Adm Price
March 2, 201Bill, the US dollar is quickly closing in on your target of 84 on the DXY.

Reversal Repeat
March 2, 201Final hour collapse yesterday and early morning collapse today as guide, Dow will close below 14k today. This seems a sure thing.

Reversal Repeat
March 2, 201How can this market be floating? is a puzzle of the century. Probably not very long.

Don Skully
March 2, 201@Reversal Repeat Exactly how many names do you post under? I`ve lost count.

Reversal Repeat
March 2, 201@Don Skully @Reversal Repeat Those who mess with trivial matters will not succeed.

Eric Pfeiffer
March 2, 201As the article states, interest only with a substantial down payment and a substantial income base. That leaves out the 95% that created the 2004-8 housing debacle.

Bill H Illify
March 2, 201BTW any snow up north?

Eric Pfeiffer
March 2, 201None in quite a while thank goodness. It can start melting anytime it wants now. Green is so beautiful to imagine at this point, despite what Repubs say.

Bill H Illify
March 2, 201Heh Heh we are a fiesty bunch...but I am with you, looking forward to green....but always good to hear you guys have a little snow for them walleyes.....Lake Agnes, just north of Nina Moose Lake

Sundar Nilavar
March 2, 201As long as the Lenders/Bankers do not practice FIDUCIARY DUTY and the required DUE DILIGENCE seriously, they have no one to BLAME but themselves for default or non-performing loans. These were/are crucial flaws which was one of the leading causes of 2008 crisis! No one learned anything from 2008!

Reversal Repeat
March 2, 201Market looks closing negative. Why? Do you want to buy stocks now? Nope. Do you want to hold stocks over weekend? Nope.

CHRIS JOHNSON
March 2, 201I have already bought and plan to hold. Constant trading is a sure way to make a small fortune, but first, you must start with a big one.

Bill H Illify
March 2, 201Will Rogers?

Eric Pfeiffer
March 2, 201I will hold over the weekend as I have for years. I have no idea , nor care, whether the market closes up or down today.

Reversal Repeat
March 2, 201@Eric Pfeiffer You sound like someone who claims, "I do not care about money." It means you do care about the market, watching it closely.

joe boboronski
March 2, 201He cares about money, he`s just in it for the long run.


Steven Severson
March 2, 201Very nice. Now we have several followers believing renting is the better route. The article states you won`t gain any equity and if prices fall you may owe more than home is worth. Very possible in a flat or declining market. We are at all time lows for housing prices, and experiencing huge appreciation in some markets (see Phoenix up 20% plus in 2012. I`m glad I have my own mind to make decisions rather than follow what others say. This article would have cost me a 30-40k unrealized gain on a 150k home in North Phoenix based on the lose premise that ignores appreciating markets (now more the norm, than exception). If you can borrow at a lower rate that what you can earn when those funds are invested...do it. It`s a proven and lucrative way of making money. (See bank, definition of). Steve S.

John Nystrom
March 2, 201@Steven Severson I have no clue what the real trend in real estate is, but I do think a lot of people are missing an important point. I believe the cost of living is and will continue to rise dramatically. If I can fix my largest living expense, housing, by buying at relatively low costs and historically low interest rates, I may be farther ahead than those whose entire monthly income is subject to rising costs, including their rent. Certainly there are ongoing costs associated with home ownership, but it is foolish to think that the landlord isn`t passing those costs on to you as a renter as well as a profit for the owner. I`m not all that concerned with equity, but concerned about having a place to live and managing my expenses.

Steven Severson
March 2, 201Spot on John. I went thru this as a CPA in the late 80`s early 90`s after the savings and loans failed and the governement used TARP to clean up. People that bought real estate at deeply discounted prices did well for themselves. History does repeat itself. If you are buying at historical lows, and historically low rates ....your equity should take care of itself. Good luck !!


This comment has been deleted Steven Severson
March 2, 201I wouldn`t lie Mr. Bronzi. I admit the error in my statement, however the grossly inflated levels of 2004 are not grossly inflated today, either based off nominal or inflation adjusted pricing. In my example, the home was purchased for just under 150k. It was built and bought at then FMV in 2003 for 180k, and gained rapidly to a grossly inflated level, as you indicated. At no time pre-correction was it worth less than the 180k purchase price in 2003, ergo when I acquired the property it was at an all time low for that property. Are you challenging the entire premise of my post, or just this one reckless and incorrect fact that changes absolutely nothing regarding the point I was making? Asking me why I would lie in my post was quite reckless on your part Geno, although safely worded. I`m not in the business of selling real estate, or in the financial sector. I stand to gain nothing monetarily from my post. So my answer to your question remains, I wouldn`t.


This comment has been deleted Geno Bronzi
March 2, 201@Steven Severson My apologies and I corrected my post. However you stand by your "error" and suggest current massively inflated asking prices of resale housing is normal and acceptable. Here`s the problem. You really *don`t know* what you`re talking about as it relates to evaluating what something is worth. You just go ahead and throw it out there hoping nobody calls you out on it or maybe because your statement aligns with the false narrative of "buy housing because it`s an investment and it`s cheap", none of which is true.


This comment has been deleted Steven Severson
March 3, 201Please oh please enlighten me as to how one determines what a home is worth? Apparently considering the value of materials, labor, and a reasonable profit margin, appraisals, and hard data are not aresenals in your worth calculating tool box.


Steven Severson
March 3, 201I appreciate you supporting what you suggest you know with absolutely no empirical data. I prefer that those who call me out not be unarmed. The S&P Case-Schiller housing price data is among the most relied upon housing price indices and data utilized. It reflects housing prices to be at 2002-03 levels, or inflation adjusted to 1998, 1986, 1955, and 1895 levels. Stating I hope nobody calls me out is just silly Geno. Hoping you move on to annoy someone else isn`t. I`d even suggest you take it up with Fiserv and let them know you think their Case-Schiller HPI data blows. The number of REO properties selling over asking price, and strong appreciation trends in several major metropolitan areas, are just two of many variables indicating that there is value out there. Not everywhere, but there for those who can capably look. The motivation behind my initial post was the article`s commenting that a no interest bearing mortgage would not build equity due to zero principal payments, or worse, in a declining market you may owe than what your home is worth. Both statements possible, but ignoring the third. In an appreciating housing market, a no interest mortgage WOULD gain equity. Hopefully you won`t take issue with something as elementary as A-B=C.


This comment has been deleted Geno Bronzi17 March 4, 201@Steven Severson Empirical data? Steve.... you don`t know what you`re talking about. When was the last time you developed a bid estimate for any structure? Go ahead and tell us about it. Quoting those who created this mess won`t cut it. Let us know when you`re interested in seeking the truth about housing.


Pandit McGregor
March 2, 201What, no negative amortization? We want negative amortization. Banks are discriminating against low income people by not offering this. Call Barney Frank. Call Schumer. There should be an investigation. Bank CEO heads should roll.

Floyd R. Turbot
March 2, 201I think the author might have tried to address the continued use of the Foreclosure Only Mortgage in this article.

Paul Rogers
March 2, 201I think all middle income Americans will pull back, if not out completely from the gamble of Wall Street casinos! I am putting it on the back burner till the country settles back down. I have absorbed thousands of dollars in loses due to the roller coaster ride economy. I can tell you this it has opened my eyes to the facts of manipulation and theft by right! Its very much Wall Street stealing billions of dollars in investments from us that is causing 99% of the problems. Shortages are just lies and false predictions by insider economical advisors getting rich off of our stupidity! Hey investors are you awake yet? Now is the time to get out or lose the rest of the little you have left in a couple of weeks when it crashes again! Remember this the big brokerage houses and banks make loads of money off of your accounts. Buying or selling generates profit for them so they could care less. WISE UP!

Eric Pfeiffer
March 2, 201The country has never settled down. I do not expect it to ever settle down. If it should ever try, then I will sell and run.


Brain Williams
March 2, 201Don`t you just love the example that`s given......"on a 1 million $......" Not mainstream population for sure.

mike long
March 2, 201who cares bout % only when bernank is go`n for a dow record today?


Kathy Rubin
March 2, 201Greed. These should only be on the banks books that make the loan and with no write-offs if they go into foreclosure and not allowed to be sold to Fannie or Freddie either! Banks give it and banks stuck with it!

Bill H Illify
March 1, 201Basically called renting.....

Francis Ducharme
March 2, 201@Bill H Illify Without the upside of renting where you don`t have to pay out of pocket for maintenance.

Doug Marks
March 2, 201...or Real Estate Taxes,

Bill H Illify
March 2, 201Though any good landlord has those costs built into their rates

Francis Ducharme
March 2, 201@Bill H Illify My toughts exactly. No free lunches here.

Geno Bronzi
March 2, 201@Bill H Illify Don`t be silly. Landlord expenses are NEVER automatic passthrough costs to tenants.


vince SISON
March 1, 201Interest-only loans have been around for decades but available mostly to those who know how to use them wisely (the affluent)...giving a tool to someone who doesn`t know how to use it properly is asking for trouble, as we have seen...

Jack Navarro
March 1, 201I call this foreshadowing. Refi business is slowing with interest rate now platue and banks are in the business of keeping the books moving.

G Kramer
March 1, 201Why are these kinds of loans still allowed to happen? There should be regulations to stop this kind of practice.

Bill H Illify
March 2, 201I wouldn`t stop them or regulate them out.....just know what your are signing

Joe Saba
March 1, 201I`ve had my interest only mortgage since 2006 - called HOME EQUITY LINE OF CREDIT - HELOC and since it doesn`t make any sense to pay it down I`ll wait another 3 years and give it back to wells fargo or maybe sooner

John Scott
March 1, 201We never learn from the mistakes of our past.






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