Wednesday, January 7, 2009

Outrageous Mortgage Schemes Continue…

WaMu (now JPM - the epicenter of leverage and bad derivatives) is desperately trying to blow ever larger bubbles. Remember that JPM has received government money, your money, to buy BSC and they are exchanging BILLIONS of their shit for Treasury money, AND they are guaranteed taking a ton of TARP money, NOW they are doing shit like this through what was WaMu. This should make every American angry beyond belief:

Article by the very knowledgeable “Mr. Mortgage” - WaMu’s New $1 million 5-year 1% Balloon Loan (mod) - $878 Per Month!
NEW WAMU LOAN MOD - THE 5-YEAR BULLET!

Below is an actual example of a recent WaMu loan mod with a 5-year $1 million bullet payment. This mod takes exotic lending to level I have never witnessed in my 20-years of mortgage banking. This makes a Pay Option ARM looks safe and cozy — and puh-lease do not tell me this is great because it frees him up to spend money into the economy.

Banks offering and borrowers actively accepting this style loan mod will guaranty that the housing crisis stays will us for a long time to come. This borrower will lose his home in 5-years, I have no doubt. That is of course unless his house price goes up 100% AND great, low rate super jumbo money returns to the market so he can refi out of it - then again, many lenders won’t even refi a loan that has had a previous loan mod done.

Property Value: $800k

Note amount: $1 million plus deferred interest

New Mod amount: $1.053 million

First TWO years rate/payment: 1% and $878

Third year rate/payment: 3% and $2633

Forth year rate/payment: 5% and $4389

FIFTH YEAR PAYMENT - THE BULLET: ALL OUTSTANDING BALANCE DUE AND PAYABLE

All rights to future predatory lending claims waived.

And you thought that SANITY had returned to lending? Ha!

This type of stuff just leaves me numb!

Pink Floyd, Comfortably Numb: