Increased Defaults as Interest-Only Loans Recast -Fitch
The ghosts of originations past could still come back to haunt the housing industry according to a new report from Fitch Ratings. The company says that half of those borrowers who have loans in performing residential mortgage backed securities (RMBS) are facing increases in their mortgage payments over the next five years.
Fitch says the mortgages that will be affected by increases are those with adjustable interest rates (ARMs), loans that have had interest only payment features (IOs), and loans that were modified to save or redeem them from default. Fitch notes that payment increases have historically led to high rates of default with a correlation between the size of the payment increase and the default rate.
‘Interest-only loans are in store for the largest payment increases,’ said Director Sean Nelson. ‘As a wave of peak vintage 10-year IOs approaches recast, many mortgage borrowers could see their monthly payments more than double.’
More here…
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I’ve been fighting the banks,(County-Wide, Bank of America & Wells Fargo) since the death of my husband in 2007. I didn’t sign this mortgage & my husband should of never been able to get one because he was a liver transplant patient & died within a little over a year after this transaction. I’ve not made a payment since February of 2008, because the payment were almost $4000.00 a month. I’m disabled & was let go at my job because they found out I had Lupus. I’ve had 3 attorneys, & all they have done is take my money & in the long run, I’m trying to do this alone. I’ve called politicians from my state (MA) & all I get is Lip Service! I was a victim of Mortgage Fraud in the early “90’s” & had to walk away from my home & business. I’ve been in my home now 31 yrs. & I told them I will not leave my home! I’ve loss a bundle of money ( could have my house paid off) because of corrupt banks, lawyers, & politicians. This mortgage has gone from Country-Wide, to B.O.A., & now Ocwen. They play these games so the Stature of Limitations run, so now they can start with foreclosures. For over the past 7 years, every month I’ve sent these banks, the same information & have got nowhere. If I lose my home, I’ll be homeless because what I get from Social Security, I couldn’t even rent an apartment! If there is anyone out there who could help me, I would deeply appreciate it. I’m 60 yrs.’ old, disabled & not even employable because of my illness. I can be reached at (978)372-2726
Exact same thing is going to occur for those wonderful loan mods done, when the 5-year term ends and the rate escalates. People do NOT read what they are signing and with those loan mods all they are doing is delaying the inevitable unless they win the lottery, gain a massive inheritance, or live in an area where the market is rising at a rate of 10% per year or more, which isn’t likely for any of the above. It’s like how people believed that a short sale was going to save their credit! Wrong! Oh and paying these loan mods don’t reflect on their credit either so that is deteriorating all the while. Why doesn’t anybody ever ask why the lenders are NOT recording these loan mods in the courthouse records? Hummmmmm…….
“Fitch notes that payment increases have historically led to high rates of default with a correlation between the size of the payment increase and the default rate.”
Where’s Captain Obvious when you really need him?