Posted by Susan Fischer on 12/3/06 11:04pm
Msg #163692

Balloon Payment and the 10/20 thing...the surprise...

is this a brand new product, and is anyone seeing more 40 and 50 year loans?

Reply by Lisa Prestegard on 12/4/06 6:55am
Msg #163704

Yep... lots of 40 year ammoritization loans...

especially folks who took advantage of those lovely Option Arms during the time of exponential land appreciation (skewed values) in my market.
What's happening now is that values are coming back down (market correction), and those Option Arms are adjusting, making for higher LTV ratios and lower equity bases in their home (negative ammoritization).
Consequently, in order to continue living in their home and be able to afford the payment, lenders are offering that fabulous '40 year amm. with a balloon in 20' (or fewer) years.
Selling is not an option... these homes will no longer appraise at the current mortgage amount! So...folks are forced to stay and wait, hoping that the market again becomes favorable.
We're seeing forclosures like mad in my county, which is something that's never been an issue.

Reply by PJM/MI on 12/4/06 6:57am
Msg #163705

Re: Yep... lots of 40 year ammoritization loans...

Same here, and too many foreclosures.

Reply by Lisa Prestegard on 12/4/06 7:15am
Msg #163707

Re: Yep... lots of 40 year ammoritization loans...

As a Lic. Real Estate Broker, it means another source of income for me. I perform Broker Price Opinions and drive-by property inspections for the lender during pre-forclosure. Not that I am pleased about folks losing their homes, but it has added to my income considerably during slow signing periods.
BTW, anyone can do the property inspections... don't have to be a real estate agent.