A Question from a Real Estate Salesman in Atlanta, Ga.

[juajen]

This question was emailed to me from a relative in Georgia. I thought I might get an answer for her. I have to say this is not something I have seen discussed on here, but I certainly could have missed it. Is this an isolated company doiing ARMs or is this widespread in stimulus dealings?

"I honestly think your DU aught to start a campaign of letters to congressman (all of them, all over the country) with just this line--

'Do you really think that giving people the opportunity, actually encouraging them, to refinance their homes at 3.75% today with an Adjustable Rate Mortage that will increase after 5 years,is helping them? It is just delaying the loss of their home for 5 years.

Values will be going down for a number of years. And interest rates going up. Encouraging to finance to lower their rates now, just helps the mortgage companies to make money on refinancing and then be in a position to either foreclose and increase the rates in 5 years.'

This should be labelled a CRIME!"

Any answers will be forwarded on to her. I am totally inept on the research function, so would appreciate any info that readily comes to mind from any of you to refute or confirm this info.

[secondwind]

1. can't help...good luck.

[DURHAM D]

2. This might be a very good deal.

Many ARMs reset after two years. What is the cap?

Why assume lost off home in 5 years?

I guess the other option is to walk away and rent.

[juajen]

3. Thanks for that reply. I hadn't looked at it that way. I will forward your

post, and I thank you very much for your reply,

[rucky]

4. Depends.

What's it indexed to?

What's the cap?

What are the fees involved?

What's the APR?

What's the occupation & credit history of the borrower?

How long do they plan to stay in their home?

How much equity do they have in it?

the devil's in the fine print.

ARMs have fallen out of favor. What kind of rate are they offering on a fixed?

[mkultra]

5. sounds like she is confused.

Who is encouraging ARM loans and who says housing prices will go down for a "number of years"

[juajen]

6. I don't know. I will wait for a while to get more replies

before I forward this whole thread to her. I really appreciate your contributing your very astute questions.

[quiller4]

11. House prices in my area peaked in 2006, bottomed in mid-2009 and

have been rising since August. With fixed rates so low, I can't understand why anyone would choose an ARM but re-financing for a lower fixed rate makes sense since fixed rates are just coming off record lows.

[ima_sinnic]

7. IMO, anyone who would refinance with an ARM now, after knowing what's happened,

should have his or her head examined.

From now on, I will have zero, nada, ZILCH sympathy for anyone taking an ARM now and then a few years down the road having to go bankrupt/facing foreclosure. Like, nothing was learned from the present debacle?

[dionysus]

12. when i refinanced this summer, i asked the loan officer what sane person would ever get an ARM.

they said they are only supposed to be used by people who know they are selling their home within 2 or so years, so they can use the saved money to pay down debts or save up a downpayment for a different house. they were never designed to be used for a house you plan on keeping (or a house you can't sell).

but i guess a lot of shifty loan brokers pushed them on the gullible.

[Orsino]

8. "Just delaying the loss of their home for 5 years"?

Just? Keeping families housed for several years is somehow a bad thing?

Methinks she is taking her own home for granted.

[slackmaster]

10. People who go through foreclosure usually end up housed as well

They typically end up renting.

[slackmaster]

9. It makes perfect sense from a political perspective

Five years at the low, teaser rate puts us well after the November 2012 election.

[dionysus]

13. where is the govt promoting this? i have never heard of it.

[tledford]

14. "aught" == zero, "ought" == should eom

[juajen]

15. Do you have a contribution to the subject of the post? NT