Once again, 60 Minutes gives a great example of poor journalism......This is ancient news. The ALT A market/Option ARM market has been an issue since day one of the "credit crisis". Yes, we are facing more resets. And, we might only be ½ way through the problem (though that doesn't automatically mean we will or won't have continued price drops). Experts have been predicting that the real estate market won't be out of the woods until late 2009 at the earliest for about a year now. Some have moved that date to 2010. Given the state of the current economy, that seems reasonable.
Here's something interesting that isn't being reported - the indices that Adjustable Rate Mortgages are adjusted to, are dropping. Drastically and rapidly. I wish I had an ARM right now. Many of the "ALT A" loans had margins that are the same as conforming loans. So - some of these "horrible" loans will adjust to interest rates in the neighborhood of 3.5% to 4%!!!!!! Not all, but some.
Some of the option arms - well - some of those people are screwed, and a lot of the foreclosure activity you've seen so far has been the unfortunate folks with the bad versions of Option Arms and, unfortunately, the high foreclosure activity on these loans will continue until we burn through the couple of million of these loans that were done in '06 & '07. However, I wish I had one of these loans and I regret not refinancing my house into one when I had the chance. They way I would have set it up for myself (and any clients who were willing to take a lot of risk), I'd have an interest rate around 3.5% right now. Killer. But - I didn't do them for myself or for any customers because at the time these were popular, they weren't good for the client. Probably cost myself $500,000 in commissions, but I'm still around and so are most of my clients.
Unfortunately, the big players in Option Arms - like Countrywide, WAMU, Wachovia, and the brokers who sent them the deals (and some of them made $10,000 to $20,000 per file!!!! Can you believe that?) - were taking advantage of the public and - guess what? They're out of business. Screw the public and you're gone! (the next brokers who will be crucified are the ones who are pushing those incredibly expensive "money merge accounts" - what an incredible rip off....)
I'm really irritated how they are reporting last years news as something ground breaking. 60 minutes has glaring problems with accuracy in reporting - like the Audi 5000 stories that were proven false in the 80's. It's unfortunate that some of the public still looks at them as a credible news source. I think they are pretty good for "feature" stories like interviews of celeb's and stuff, but they are so out of touch with the real world it's incredible.
This reminds me of when Tom Brokaw blew up the Chevy trucks with a bomb because they couldn't get them to blow up like they were reporting they did.
Sorry everyone - I'm just really disgusted with them....I know my anger is coming through on this......I could rant and rave about this all day - so to your question - what's this mean to me/us? Here's the good news:
For us - I think there is still a lot of opportunity to help people out with good real estate advice as well as good mortgage advice. It truly is a good time for a qualified buyer to buy.....housing starts were at an all time low last month! Inventories will eventually drop, and you can say you bought near the bottom....