Comments on: Mortgage Defaults Already at $50bb Per Month…$700bb Won’t Go Too Far!

By: Waiting With Bated Breath | Money and Markets Blogs

Waiting With Bated Breath | Money and Markets Blogs — Fri, 09 Jan 2009 16:47:02 +0000

[...] Mr. Mortgage writes that “If defaults remain at roughly $20 billion per month in CA and $50 billion nationally [...]

By: Waiting With Bated Breath

Waiting With Bated Breath — Wed, 07 Jan 2009 21:51:44 +0000

[...] Mr. Mortgage writes that “If defaults remain at roughly $20 billion per month in CA and $50 billion nationally [...]

By: Waiting With Bated Breath « Red Hot Energy and Gold

Waiting With Bated Breath « Red Hot Energy and Gold — Tue, 23 Dec 2008 04:08:54 +0000

[...] Mr. Mortgage writes that “If defaults remain at roughly $20 billion per month in CA and $50 billion nationally [...]

By: Waiting With Bated Breath « red-hot-energy-and-gold

Waiting With Bated Breath « red-hot-energy-and-gold — Thu, 11 Dec 2008 15:04:17 +0000

[...] Mr. Mortgage writes that “If defaults remain at roughly $20 billion per month in CA and $50 billion nationally [...]

By: Waiting With Bated Breath « Red-Hot Energy and Gold

Waiting With Bated Breath « Red-Hot Energy and Gold — Wed, 10 Dec 2008 01:23:34 +0000

[...] Mr. Mortgage writes that “If defaults remain at roughly $20 billion per month in CA and $50 billion nationally [...]

By: ALT-A: The Risk Abatement Disaster is Coming « Your Mortgage or Your Life

ALT-A: The Risk Abatement Disaster is Coming « Your Mortgage or Your Life — Mon, 20 Oct 2008 17:07:42 +0000

[...] between subprime and Alt A do not begin and end with their underwriting guidelines, either. An Alt-a default wave that began in 2008, is not expected to peak until 2011. Although combined Alt-A defaults is not [...]

By: Lee

Lee — Mon, 06 Oct 2008 22:31:02 +0000

Well there are some pretty strong opinions here.

Just curious what does everyone think now that the bill has passed?

Good luck Oh Brother!

By: Stu

Stu — Tue, 30 Sep 2008 22:15:48 +0000

Libor is probably the best tool to use as an indication of how tight credit has become. This I still say is not entirely a bad thing. We need to unwind this mess and the sooner we start the better for everyone. Will thier be pain… Yes and lot’s of it! It is what happens when you have such high excesses for a decade. The Fed needs to stay out of things and let this thing come to an ugly close. Then and only then will we be able to start to heal properly.

By: oh brother

oh brother — Tue, 30 Sep 2008 17:21:16 +0000

Of course, there were ARMs tied to the LIBOR which were written for higher “plus” rates than the rates in my example.

By: oh brother

oh brother — Tue, 30 Sep 2008 17:17:43 +0000

Bruce,

Yes, I am watching the LIBOR, and I am also watching the TED – which was 3.52 last time I checked. Extremely high.

It sounds like you understand what the LIBOR is, but for those on this board who do not: LIBOR stands for London Interbank Offered Rate. It is the interest rate at which large international banks are willing to lend each other money on a short-term basis. The LIBOR is calculated once per day. There are different LIBOR rates for periods which range from overnight to one year.

ARMs are typically tied to the 6-mo LIBOR, plus 2-3 percentage points. A 6-mo LIBOR of 6.5%, for example, would mean the interest rate on the ARM would be 8.5-9.5%.

Many HELOCS, student loans, and small business loans are also tied to LIBOR rates. ie, LIBOR plus anywhere from 4 to 9 points.

Long story short: Credit is extremely tight, and punitively expensive.