NationStates Jolt Archive

I just received junk mail from Washington Mutual

Introducing the 5/1 Interest only home loan

Secure fixed rate for five years with an interest only payment.

It doesn't say subprime but you read the tinywiny text and it basically describes it.


Why have one disaster when you can have two?

Forgive my ignorance, but I have no idea what a sub-prime is. Probably has something to do with never needing to know as of yet.

Forgive my ignorance, but I have no idea what a sub-prime is. Probably has something to do with never needing to know as of yet.
It's a way banks and other mortgage lenders have of lending money to people to buy houses who have sketchy credit, no money to put down, no verifiable income, can't really afford the house they want, etc. It's risky--think junk bonds but with a mortgage attached. And it was a way for banks and others to keep turning over business in an overheated housing market.

But there's the downside, which we're seeing now. They're risky loans--really risky--and they're defaulting more quickly and at higher rates than anyone in the business ever imagined they would (blinders on, in my opinion), and so you're seeing a housing crash in lots of the country, because lending practices are tightening (reducing demand), building companies had lots of stuff in the pipeline (increasing supply) and foreclosures are coming on the market (further increasing supply). Down here in Florida, it's getting to the point that I might actually be able to buy in a year.

Forgive my ignorance, but I have no idea what a sub-prime is. Probably has something to do with never needing to know as of yet.

It's a mortgage for someone with a FICO score of less than 680ish. And interest only mortgage is not necessarily "subprime", it could be Alt-a. (I.e not conforming to fannie repayment schedules or underwriting standards, but still to people with good credit ratings).

WAMU's been doing this for years. It was the one of the biggest ALT-a subprime lenders last year.

Nothing new really. But the whole Sub-prime issue reminds me a bit of the Savings and Loan failures in the 80's.

Nothing new really. But the whole Sub-prime issue reminds me a bit of the Savings and Loan failures in the 80's.

It absolutely does, and I thought the same thing about 2 years ago when I saw the housing market going apeshit in places it had no business doing so. My in-laws have a 3 BR house here in south Florida, probably 10 miles from the beach on a major road in a good neighborhood. It's a house that's probably 45 years old--and a year ago it would have gone for $330,000 easy. No way is that house worth that much--it's a great house, don't get me wrong, but it's not worth $330K. And that was common down here. There are condos in my neighborhood, new construction, and the asking price is $699,000. Many are sold but no one is living in them because they were bought as investments. And still more stuff is being built.

But there's the downside, which we're seeing now. They're risky loans--really risky--and they're defaulting more quickly and at higher rates than anyone in the business ever imagined they would (blinders on, in my opinion), and so you're seeing a housing crash in lots of the country, because lending practices are tightening (reducing demand), building companies had lots of stuff in the pipeline (increasing supply) and foreclosures are coming on the market (further increasing supply). Down here in Florida, it's getting to the point that I might actually be able to buy in a year.

It's basically going stop after this week. The big originators, countrywide, WAMU, AFB are still trying to sell these loans, but they can't sell them in the secondary market anymore. And a lot of paper is in the process of being downgraded and making it worthless. (Fitch just downgraded a whole load today).

Trouble is there is so much of this crap and the way it was packaged makes it impossible to know what it is really worth. And it's in pension funds, people's 401 bond funds, insurance reserves.

Good times.

It's basically going stop after this week. The big originators, countrywide, WAMU, AFB are still trying to sell these loans, but they can't sell them in the secondary market anymore. And a lot of paper is in the process of being downgraded and making it worthless. (Fitch just downgraded a whole load today).

Trouble is there is so much of this crap and the way it was packaged makes it impossible to know what it is really worth. And it's in pension funds, people's 401 bond funds, insurance reserves.

Good times.

Don't forget hedge funds--Bear Stearns was shitting themselves this week as well.

I just received junk mail from Washington Mutual

Introducing the 5/1 Interest only home loan

Secure fixed rate for five years with an interest only payment.

It doesn't say subprime but you read the tinywiny text and it basically describes it.


Why have one disaster when you can have two?


Gotta love WAMU (Washington Mutual)...

They went crazy in the early 2000's, buying mortgages left and right. They also have a nasty habit of posting your payments late. Many a times I would see from my bank that the mortgage check had been paid, but WAMU would credit it to my mortgage late, so as to charge the $45.00 late fees.

They were closed from North Carolina by the Attorney General's office for deceptive practices.

Do a google search on Washington Mutual complaints.

Gotta love WAMU (Washington Mutual)...

They went crazy in the early 2000's, buying mortgages left and right. They also have a nasty habit of posting your payments late. Many a times I would see from my bank that the mortgage check had been paid, but WAMU would credit it to my mortgage late, so as to charge the $45.00 late fees.

They were closed from North Carolina by the Attorney General's office for deceptive practices.

Do a google search on Washington Mutual complaints.

Ugh. I hate Washington Mutual. They have more ways of taking a dollar here, or three there, or ten there. Jerks.