Adjustables (ARMs)

Barclays and HSBC manage to lose $6 billion

Written by Timothy Blake on November 15, 2007 under Adjustables (ARMs), Archives, Economic Impact, Outside the U.S., Risk Management

Barclays and HSBC are on different ends of the mortgage crisis but between them they lost $6 billion from their exposure to the U.S. housing crisis and related credit crunch. HSBC lost money because of U.S. mortgages going bad, and Barclays lost money because of collateralized debt obligations (CDO’s) based on U.S. mortgages. The process of putting together a mortgage pool begins when a home loan is originated by a bank or mortgage lender. That loan is typically sold to a Wall Street firm that pools it with thousands of others. Once a pool is packaged, it is sold to investors in different slices, based on risk. That is the CDO.

Paying off credit cards as ARM’s go up can be risky

Written by Timothy Blake on November 08, 2007 under Adjustables (ARMs), Archives, Risk Management

A review of investors with interest only loans shows they are still paying the bare minimum each month. For the average home owner with an adjustable rate mortgage the options are not as good. Many families are considering how to tighten up the budget, and paying off the credit cards might sound good. More aggressive borrowers are calling their credit card company with an ultimatum – either settle or less than the balance due or nothing at all. Debt settlements, and early credit card payoffs for less than the full amount due, come with high risks as negotiations begin.

Option ARMs Worry Borrowers, Lenders, Credit Card Companies

Written by Timothy Blake on October 13, 2007 under Adjustables (ARMs), Archives, Statistics

Not too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their mortgage as they keep up with their credit card payments. Of course the opposite might be true. But as soon as credit card rates skyrocket to the maximum allowed by law the bubble might burst for these home owners.

Credit Report Clean Up and The Statute of Limitations

Written by Timothy Blake on October 11, 2007 under Adjustables (ARMs), Archives, Lawsuits, Suggestions

If you are concerned about your adjustable rate mortgage or just cleaning up your credit report an issue that you should be aware of is the statute of limitations on old debt. Many people believe they must pay everybody regardless. At the same time some creditors try to get people to renew their debt, primarily because the statute of limitations is about to run out. Be careful when talking to these people on the phone. Any misworded answer to any simple question can restart the debt, throwing the statute of limitations out the window.

Banks, Predatory Lenders, and Ambassadors

Written by Timothy Blake on October 11, 2007 under Adjustables (ARMs), Archives, Editorial, Government Positions, Lawsuits, Opinion, Suggestions

Boston Federal Reserve Bank president Eric S. Rosengren urged banks to take a second look at subprime borrowers, saying many have improved their credit scores since buying a home. If that is the case banks could step in and help those homeowners. Meanwhile arguments and debates continue as issues are labeled as “bailouts” or “rescues.” It is interesting to note the soundness of Rosengren’s theory – which it is – while contrasting it against new issues of predatory lending.

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