BEWARE! NEW WAVE OF FORCLOSURES WORSE THAN SUBPRIME! BROUGHT TO YOU MY UHMC AND NICKY CHAMBLESS

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.” Last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.” Borrowers could see their payments jump 50 percent or more, and they may not be able to sell their properties for as much as they owe. The mortgage giants Freddie Mac and Fannie Mae, which own or guarantee nearly half of all mortgages, are trying to stem that tide. Last week, they said they would pay more to the mortgage servicing companies that they hire to modify delinquent loans and avoid foreclosures. Delinquencies in prime and alt-A loans are particularly challenging for banks because they hold more such loans on their books than they do subprime mortgages. The bank’s troubles stem from its $6.2 billion portfolio of so-called option adjustable-rate mortgages, which allow borrowers to pay less than the interest owed on their mortgage in the early years. The unpaid interest is added to the principal due on the loan, so over time borrowers can owe more than the initial loan amount. Eventually, when loans grow by 10 percent or 15 percent, the borrowers are required to start paying both the interest and principal due. Many borrowers who got these loans during the boom had good credit scores, but many of them owe more than their homes are worth. Analysts believe that many will not be able to or want to make higher payments. The "not so terrible news" is that a Lender spends approx. $40,000.00 to forclose on a property. So at this point, Lenders are more willing to negociate short-refi's and work with you regarding the affordability of your payment. Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights. Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights. The "not so terrible news" is that a Lender spends approx. $40,000.00 to foreclose on a property. So at this point, Lenders are more willing to negotiate short-refi's and work with borrowers regarding the affordability of your payment. http://www.nytimes.com/2008/08/04/business/04lend.html?_r=1&pagewanted=2&oref=slogin