And so it begins

[unixronin]

I just heard it reported on NPR that Al-Qaeda has already begun vilifying Barack Obama.  AlQ's second-in-command apparently released a recording calling Obama "a traitor to the blacks and Muslims of the world", and "a house slave", among other epithets.

This is probably not an auspicious start to his foreign-policy career.  But at least maybe it'll silence the wingnuts who say he's secretly in league with the jihadists.

Comments

Re: Honeymoon is over...

[msa.livejournal.com]

Well, this loan is in that category. They put $6,000 down, and paid $293,000 for this house, in 2006.

The downturn in the market, particularly the Phoenix market, where 65% of sales were to speculators, has been pretty hard on its value. A fair estimate of this homes value is approximately $160,000. They are far, far underwater.

So I did some digging at the county recorder's office. Here are their current loan terms:

Over 7% starting interest, on a 5/1 ARM. The interest rate is capped at a maximum 13.125% when it first resets, in 2011. After that, it can be raised 2.5% annually (yes, 2.5%, not 0.25% as would be typical.)

It gets better...there's also a 10 year interest only rider.

Running this through the interest only 5/1 ARM calculator, I get a total repayment amount of almost exactly one million dollars. On a property worth 15% of that total.

Given that it's interest only, they have no equity they are walking away from, and if we can complete this short sale, I am helping them avoid outright foreclosure.

As it stands, I can't feel too guilty, because this loan is clearly sub-sub-prime, and the terms are basically usurious. They honestly NEED to default on this loan. They never should have signed it, but at this point, getting out of it is their best option.

The calculator also tells me their starting (interest only) payments are around $1700/mo. Having looked at several very similar houses in the same neighborhood, many of which are currently being rented out for approximately $1200-$1300, they are quite honestly better off renting, especially since they have no equity and will establish none like this.

Re: Honeymoon is over...

[unixronin.livejournal.com]

Yeah, in that situation they don't even gain from the mortgage interest deduction, because what they save in taxes on it is no more than they'd save by renting instead of buying.