08-23-2007, 04:46 PM
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CC Member
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Join Date: Feb 2000
Location: Neverland,
TX
Cobra Make, Engine:
Posts: 7,460
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Not Ranked
Fred,
That's true, however most of these exotic loans were refi's and not purchases. Most people do not know that. Most of the loans that are now defaulting were originally set up on a fixed rate loan. They were then refi'd into the LIBOR ARM. The concept was to lower "required" payment amounts and then to make annual principle payments. This would shorten the term and the note would pay off earlier than the note life.
Also people have to live somewhere. These houses going into foreclosure will be occupied by other people who lost their homes the same way. What it amounts to is a lot of people credit will get screwed up and everyone will play house swap.
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