Levee Breaks

When the Levee Breaks — Led Zeppelin


Today’s featured property is another mortgage equity withdrawal casualty. Properties like this underscore the dangers of partaking in the appreciation kool aid of the Great Housing Bubble. Most, if not all, of the people who believed in endless appreciation and serial refinancing took out their equity. Many utilized Option ARMs, and they are going to lose their homes. Think about the ramifications of that belief and the decision it influenced: Homeowners who did not take out their equity and refinance with Option ARMs are not going to be in financial trouble, and they will keep their homes. Those that did take out their equity are going to lose their homes. This is one very important life decision supported by a bevy of fallacious beliefs with very serious consequences. Financial bubbles are only fun when they are inflating…

Mortgage Equity Withdrawal 1991-2007

There could be any of a number of reasons this house is for sale now,
but the fact that the owner took out an Option ARM with a 1% teaser
rate in January of 2006 is likely the reason for the sale. A 2/28
Option ARM would have reset in February, and the payment on a
$1,000,000 mortgage is quite large. There is also a HELOC for $144,500. If the HELOC is tapped, and if the negative amortization has accumulated, the total debt on this property could be approaching $1,250,000. It doesn’t seem likely they owe less than a $1,000,000. Perhaps they invested the money wisely and they can pay down the debt at resale. If so, they would be the exception and not the rule.

Asking Price: $1,129,000IrvineRenter

Income Requirement: $282,250

Downpayment Needed: $225,800

Monthly Equity Burn: $9,408

Purchase Price: $584,500

Purchase Date: 5/4/2001

Address: 14 Mar Vista, Irvine, CA 92602Maxed Out HELOC

Beds: 4
Baths: 3
Sq. Ft.: 3,030
$/Sq. Ft.: $373
Lot Size:
Type: Single Family Residence
Style: French Country
Year Built: 2002
Stories: Two Levels
Area: Northpark
County: Orange
MLS#: S527115
Status: Active
On Redfin: 13 days

Beautiful, Brentwood/French Country elevation with long driveway,
porte-cochere w/ security gate, first floor bonus room, grand entry w/
hardwood floor and spiral staircase entry, separate formal
living/dining rooms, two fireplaces, kitchen w/ large sit-up center
island, granite, built-in Monogram refrigerator, G. E. profile
appliances, dual ovens, convenient breakfast nook w/ built-in seating
overlooks courtyard, walk-in pantry, custom media niche built-ins,
second floor computer work station, crown moulding, plantation
shutters, berber carpet, window casings, large master suite w/ sitting
area, luxurious bath w/ upgraded counter tops, separate shower, deep
oval soaking tub, individual vanity, dual sinks, huge mirrored walk-in
closet, entertainer’s backyard w/ built-in BBQ/sink, fireplace, resort
amenities: pools, parks, spas, tennis/sports courts

Do you like our new graphic, MaxedOut HELOC?



If this seller obtains their asking price, they stand to make $476,760. That is a great profit for 7 years ownership. Of course, they probably won’t get their asking price, and it is likely they have already spent their profits, but if they get lucky, someone will bail them out of their debts and buy this property. Let’s assume for a moment this seller gets their asking price and walks away with no debt and no credit damage. So what? If they spent all the money, they don’t have any equity to take with them to buy the next property. Do they have the income and the saved downpayment to afford a similar property in the future? Maybe, but I rather doubt it. Once that money is spent, it is gone forever. There is a price to be paid for that “free” money during the bubble. Many former homeowners will pay the price with a greatly diminished quality of housing. HELOC abusers do pay a price. Nothing in life is free.


Another song about the housing bubble? Is it raining debt? Is it raining REOs? Will praying for a bailout help? Where is the market going? going down now…

If it keeps on rainin’, levee’s goin’ to break,
If it keeps on rainin’, levee’s goin’ to break,
When The Levee Breaks I’ll have no place to stay.

Mean old levee taught me to weep and moan,
Mean old levee taught me to weep and moan,
Got what it takes to make a mountain man leave his home,
Oh, well, oh, well, oh, well.

Don’t it make you feel bad
When you’re tryin’ to find your way home,
You don’t know which way to go?
If you’re goin’ down South
They go no work to do,
If you don’t know about Chicago.

Cryin’ won’t help you, prayin’ won’t do you no good,
Now, cryin’ won’t help you, prayin’ won’t do you no good,
When the levee breaks, mama, you got to move.

All last night sat on the levee and moaned,
All last night sat on the levee and moaned,
Thinkin’ about me baby and my happy home.
Going, going to Chicago… Going to Chicago…
Sorry but I can’t take you…
Going down… going down now… going down….

When the Levee Breaks — Led Zeppelin

69 thoughts on “Levee Breaks

  1. george8


    This is about the next house that fits your specifications, right?

    I suggest that you make offer at $925K. You may get it a few months down the road.

    1. ipoplaya

      Yup george, this house is firmly in IPO’s target spec. This particular one backs to Culver so I wouldn’t touch it even at $925K.

      I have been experiencing a good measure of glee as the inventory of 2700-3100sf homes in Northpark has continued to climb of late… There are 8-9 properties on the market today in that size range, all listed at least $50-75K over most recent comp.

      I think somone will get desperate enough to start dropping price or maybe take a lowball over there and Family De IPO could as a result get a shiny almost-new Northpark home for $900K.

      $900K on 2800sf in NP would mean another 15% off the last close in that size. 15% more would be enough for me to make the move… The place might still fall another 10-15%, but I’d be in long-term and wouldn’t care.

      1. 7

        I am your competitor, IPO; we are looking at similar house spec. I still have about 2 or 3 years before we *have* to move, but it is possible that you and I may ending up making an offer on the identical house.

        1. ipoplaya

          Let me guess, you probably have a 2-3 year old and the “have to” move coincides with kindegarten/first grade? That’s our situation as well… Almost four year old that we could do K with at his preschool, so we have a max of 27-28 months to milk out the price declines.

          I made an offer on a Sunnyvale place late last year. Went for $50K more than I was willing to pay. Haven’t gone after an NP property since.

          I think its a good possibility we end up in Tustin Ranch vs. Irvine. Prices are softening faster and the area right around Peters Canyon and Pioneer would be great to live at re: kids walking to school and such. I don’t like the overcrowding issues at Hicks…

        2. 7

          Actually, my oldest boy is all set until he is done with 5th grade, which is ~3 yrs away, so your guess is on the right track. He and his siblings got into a nice elementary school in TUSD, but the middle school and high school is not as good as we want.

        3. David

          Pioneer Middle is the top rated middle school in orange county. Why would you be concerned?

        4. 7

          I don’t remember which is the assigned MS, but it won’t be Pioneer. The HS would be Tustin HS, not Foothill or Beckman.

      2. LC

        Northpark is the new Little Bagdad. As soon as the last helicopter takes off from the roof of the new $780M embassy, expect the flood of refugees to settle there. You heard it here first.

  2. Larrygg

    This whole Heloc thing has always baffled me. You take $100K out of your house and buy a car or take a trip or redo the kitchen. You still have to pay it back (someday) and you still have to make added payments every month. I always thought the goal was to buy a house you like and try to pay it off so you could live rent free. Isn’t that the road to financial freedom? Or I am I just a chump?

    1. mav

      I believe many americans now view credit as something they never have to pay back. As long as they can make interest payments, they can keep spending.

      1. buster

        Mav – Make that USED to believe they would never have to pay back. It’s just a giant Ponzi scheme where one lender takes over from another and Americans keep refinancing their lives. But now the music has stopped and lenders refused to continually roll over debt. The bill has become due.

        1. LC

          That’s what taxes are for, right? You pay taxes, so that you never have to pay back the loans.

    2. caliguy2699

      “I always thought the goal was to buy a house you like and try to pay it off so you could live rent free.”

      That reminded me of this good ABC news video that has an interview with Shiller as well as fun pictures!

      The pay off your house thinking seems to have gone out of style, since it was easy to make $ off your house during the bubble. Shiller references it by saying we’ve turned into sort of an investment culture, and that could keep the price of homes volatile for a while.

      1. buster

        caliguy – The way we look at it is as a long-term investment. We paid more to “buy” than to “rent” quite a while ago. Now inflation has pushed up comparable rents but our payments are the same. We look at the initially higher living costs as an investment that reaped future “lower-than-market” living costs, and it has worked out well.

        If you take the long-term view, owning can be a good deal even if you haven’t yet paid off the mortgage. Of course, timing is everything and if you overpay on the front side you will be screwed for a long, long time.

    3. Mark

      “…you still have to make added payments every month. I always thought the goal was to buy a house you like and try to pay it off so you could live rent free.”

      You can find “hard luck” stories in the media daily now, and while they touch on how the family is losing their home, the media never asks the direct question: “What was your plan? You received this exotic mortgage, but how were you ever going to make the payments after the adjustment period?”

      I think most would answer, “But my broker said I’d always be able to refi.” Even so, what was you plan? Were you going to refi every two years until you quit working and then move into an apt? …

      Doesn’t make sense…

    4. doug r

      I never got paying off your option ARM with a HELOC. I guess that’s why you get a five year so you can sell before it all turns to sh*t. Oh well, so sad.

  3. NoWow!way

    We have friends who have a home similar to this. The kitchen is amazing.

    However, as the kids are now off to college and will probably be out of the home permanantly in the near future, what the heck is a working couple going to do with this kind of monster? They haven’t talked about moving yet. They definitely bought at the right time and have had astronomical appreciation.

    I am hoping that they are like our friends. They don’t need this size home and are scaling down and hoping to profit on their timely investment.

    I’ve heard people in the lending industry claim that those teaser rates really do make sense if you have a short term time horizon for getting out of the home coming up.

    Their furnishings are not elaborate and the patio stuff looks like they shop costco. Wicker in the front sitting room? Hardly trying to impress the Jones. And one picture of the blue couch is downright frumpy. These are regular people who have been raising their family in a decent “investment” home for the last few years. The time of buying into this neighborhood capitalized on an excellent upward move that the housing market took immediately after their purchase.

    I believe this is in a gated community. I am not sure why they wouldn’t mention this in the MLS, if true.

  4. mav

    The new graphic: “Maxed Out – HELOC” is awesome.

    Are credit card companies reviewing their customer base for HELOCs and other outstanding debt? If they don’t shut these people off of the credit crack pipe things are going to get a lot worse. People were taking out HELOCs to pay off credit card debt. Now I fear the exact opposite is happening. Without home appreciation the ultimate result is ugly for everyone.

    I hope credit card companies are reviewing the leverage of their customer base. There are too many rats jumping off this sinking ship that have no regards for responsibility and the greater good.

    1. lendingmaestro

      Laughable, but people really thought equity was money when in fact it is THE EXACT OPPOSITE of money. It is debt that needs to be paid back.

      1. Surfing in Newport

        Equity is money. What they forgot was that the replacement cost of the house was also going up. If you did something to raise the equity in the house (e.g. remodeling or paying down the debt) then you earned that equity. If the only thing that created the equity was overall housing prices going up, then it was kool-aid equity. That is, you were going to have to pay it back or lower your housing portion of your standard of living.

        1. lendingmaestro

          Again. equity is NOT money. Perhaps I should’ve clarified that by saying free money. Only if you sell your home do you have the monies free and clear. Borrowing money from a very illiquid asset is a far cry from having money saved in the bank or even stock market.

          “Upgrades” cannot be valued monetarily with any degree of accuracy, because their value is in the eye of the beholder. Your upgrade may be hideous to another person.

        2. Surfing in Newport

          What I was trying to say was that equity is usually considered as part of your net worth. It has a dollar value, a monetary value. The question is whether or not you should consume that net worth. If it was a stock or a house you were renting out, it wouldn’t be considered bad to consume that net worth. Where people got into trouble was forgetting that they are using that asset, so you just can’t go out and liquidate it without replacing it.

  5. lawyerliz

    Impressive house. Lovely kitchen, except for the
    high hats. Don’t like high hats; hard to change.
    Aren’t high hats kinda out now?

    So they spent all their money on the house and couldn’t afford furniture.

  6. tenmagnet

    Excellent post, finally nice to see a quality home profiled.
    Not only is this one beautiful but fully loaded with upgrades top to bottom.
    The French Country exterior is exquisite.
    An absolute keeper.
    Considered this one long and hard, ultimately felt it was a little too small.
    Although, if price declines substantially would move on it, for sure.
    Great house, in a wonderful location.

  7. DeadBeatRenter

    Nicest house I have seen on this blog in a year I have been reading it. Curb appeal is still everything and of course location.
    I never judge people by the furniture in their house. The wealthiest people I know live in a home I would not live in, they own commercial property with a net income of more than Two million a year and I am nervous to sit on their furniture for it looks so dirty, a tread mill and SoloFlex (remember those) in the living room, etc. I guess that’s called old money for So Cal.
    I would love to have this home, I am a little concerned with traffic noise, but at the price they paid I will buy it today!

  8. lendingmaestro

    Great song choice, IR. One of my favorites!

    I’m actually not a big fan of this house. Too close to the street, and I dislike the huge driveway. It’s American faux-French.

    This property is exemplary of the ticking time bomb that is hidden in Irvine. Option Arms and.or low rate IO loans ready to explode in a wage deflationary environment.

    1. Dave Doolin

      Yeah, pretty much. I used to have this on vinyl. Why I am surprised I have hearing loss… go figure.

  9. freedomCM

    I know it isn’t the “Irvine way”, but a 3k sqft house on a 3k sqft lot, for a million? living three feet from your neighbors wall isn’t what a million brings to mind. and backing onto a highway (culver is 50mph)?

    BTW, how does IR know that they have have the oARM and HELOC? is it in an accessible database?

    1. irv

      The house is nice. Not my style, but nice. That’s a great kitchen for a family. But, the reason I will probably not end up in Irvine is the lot sizes. I can not fathom buying a family-sized house like this, and only getting a condo sized patio, er, yard.

      1. jhill

        The problem with the tiny lots is that the neighbors are really close. However, there is an upside in that most people are really too busy for yard maintenance, and landscapers are expensive. Also, kids are different today. They do a great deal of organized playgroup, kid-league sports, lessons, etc., and by the time they are 12 or 13 they would rather die than play in their yard at home. I am sure that developers have studied these trends and plot accordingly. I think it’s sad, but there you go. Of course there is that mid-west style where a suburban house still means an acre or half-acre and a lawnmower you can ride! Still to be found in many states, but not in CA.

        1. irv

          I agree with you that kids are “different today.” The problem is, while some do “organized playgroup, kid-league sports, lessons, etc.” too many of them really just sit on their fat arses playing X-Box or watching television.

          Still, I want a midwest-sized yard and darnit, I’m going to find me one.

    2. IrvineRealtor

      Any lien using the property as collateral is reflected in county recordings, which is available to the public. IR does a remarkable job of sorting it out, though, as sometimes these loans get bootstrapped into other items or are “wrapped” into the next loan. Uberimpressive.

    1. IrvineRenter

      Cool! I wish I could claim credit for the term homedebtor, but it has been around for a while.

  10. cosmo kramer

    “WE’RE #6! WE’RE #6! RAH RAH RAH”

    C’mon team, I know with a little hard work and the can do attitude that made America what it is today we can pass those pikers in Phoenix…

    From a PMI press release:

    PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc., today released its Spring 2008 U.S. Market Risk Index [pdf], which ranks the nation’s 50 largest metropolitan statistical areas according to the likelihood that home prices will be lower in two years.

    1. Riverside-San Bernardino-Ontario, CA: 93.2%
    2. Las Vegas-Paradise, NV: 91.9%
    3. Orlando-Kissimee, FL: 85.2%
    4. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL: 84.1%
    5. Phoenix-Mesa-Scottsdale, AZ 1 84.0%
    6. Santa Ana-Anaheim-Irvine, CA: 80.6%
    7. West Palm Beach-Boca Raton-Boynton Beach, FL: 79.6%
    8. Sacramento-Arden-Arcade-Roseville, CA: 77.7%
    9. Tampa-St. Petersburg-Clearwater, FL: 77.6%
    10. Los Angeles-Long Beach-Glendale, CA: 77.2%

    1. Carl

      I’ve never understood #8. I lived in the Sacramento area for ten years. Arden-Arcade is not a city, it is a neighborhood, and not a particularly noteworthy neighborhood either.

      1. H

        I think they use the names of official census tracts that go back many decades or more. It’s not about the neighborhood per se.

  11. NewToTheArea

    To Irvine Renter and everyone else,

    There is an excellent article at Fortune.com about Wachovia and why they had to anounce such disappointing earnings this week.

    Take a guess at the culprite. OPTION ARMS!!!

    The article is all about some lender they bought in 2006 named Golden West. The article has some great stats on Golden West’s loan portfolia in California.

    The kicker is that even with all of the increases in default and risk, Golden West was considered “by far to be the most conservative” of ARM dealers.
    Look out Orange County.

  12. Red

    Wait, whats that at the end of Culver, across Portola Parkway ? SOMEBODYS MAKING LAND!
    I thought they couldn’t do that anymore – these prices are justified, don’t worry…
    The truth is, theres a lot of cheap, vacant land when the alternative is a couple hundred bucks an acre income from farming, and you can build a real nice house for $200 a sq foot. This could drop all the way back to the price they bought it for.

    1. IrvineRenter

      “This could drop all the way back to the price they bought it for.”

      I was thinking the same thing. Prices were inflated in 2001, so when prices drop all the way back to rental parity, this place will probably go for somewhere around $600,000 – $650,000.

      1. alan

        If the economy really tanks like some economists are predicting there is no way to guess how low the floor will go. The problem with the economy is that people think most things are fine then there will be another round of layoff’s out of the blue, then more state and local government cutbacks, then another company closes and lay’s off, etc. Just like the housing market, the economy will not seize up and deflate overnight and people are still in denial in how bad things are going to get.

        The End is Near…

      2. ipoplaya

        IR, what makes you believe prices were already inflated in the middle of 2001? Didn’t we overshoot inflation adjusted median during the last correction, i.e. values in 96-97 were well below inflated adjusted median?

        Prices when this house were purchased had been climbing, but not exponentially so, for 3-4 years after 7 years of decline. I think 2002 prices are probably the inflation adjusted median and we’ll work our way down to there. This house will be $700-750K I’d think… That would probably be a 180 GRM.

  13. no_vaseline

    Those avocados are coming out at a big premium.

    I think $25,000 an acre isn’t too much to pay for avocados if they are producing today. Those are probablly fetching closer to a quarter mil an acre when they move.

    A couple of hundred bucks an acre? Only in Barstow.

  14. NewToTheArea


    I am new to Irvine. My wife and I just moved out here in February. I found this blog somehow and absolutely love it. I am kind of an economics/markets junky, so this is fascinating.

    I am trying to make sense of some numbers I found on the Lansner OCRegister blog.

    City Zip Median ?cline #homessold ?cline
    of #homessold

    Irvine 92602 $740,000 -5.2% 30 -38.8%

    Irvine 92603 $926,000 21.8% 24 -29.4%

    Irvine 92604 $530,000 -13.4% 17 -46.9%

    Irvine 92606 $605,000 1.2% 13 -43.5%

    Irvine 92612 $483,500 -12.1% 11 -74.4%

    Irvine 92614 $480,000 -12.9% 11 -56.0%

    Irvine 92618 $503,500 -5.9% 19 -26.9%

    Irvine 92620 $708,500 -2.9% 28 -44.0%

    This data is from dataquick and is year over year.

    How is it that the declines aren’t a higher percentage? I would think they would be coming down since the borders to Irvine have come down already.

    Costa Mesa 92626 $521,500 -25.2% 20 -41.2%

    Costa Mesa 92627 $487,500 -37.2% 21 -48.8%

    Foothill Ranch 92610 $575,000 -15.1% 14 -33.3%

    Laguna Hills 92653 $389,500 -52.0% 15 -55.9%

    Laguna Woods 92637 $240,000 -15.6% 21 -50.0%

    Lake Forest 92630 $375,000 -28.9% 26 -50.9%

    Mission Viejo 92691 $505,000 -21.1% 41 -37.9%

    Mission Viejo 92692 $500,000 -18.7% 25 -65.3%

    Newport Beach 92660 $1,200,000 -17.2% 22 -46.3%

    Newport Beach 92661 $1,580,250 -41.3% 2 -50.0%

    Newport Beach 92663 $1,169,090 -7.2% 14 -44.0%

    Newport Coast 92657 $3,410,000 156.9% 11 -64.5%

    Tustin 92780 $385,000 -34.2% 26 -31.6%

    Tustin 92782 $570,000 -25.5% 28 -64.6%

    All resale houses $570,000 -18.0% 1,072 -42.8%

    All condominiums $375,000 -18.5% 408 -51.3%

    All new homes $516,500 -17.4% 183 -56.2%

    All homes $506,000 -19.6% 1,663 -46.9%

    Anybody who has some insight, please comment. I am 24 and my wife and I would love to stay in Irvine, but there is NO way we could afford it (in the next 2 or 3 years when we look at a home or condo) if prices do not fall in line with incomes.

    We make 90K plus between the two of us, but I don’t really like the taste of Kool Aid. We out of state transplants have a different perspective.

    1. houseonlegs

      These figures are based on the MEDIAN. Half of the homes sold for less and half of the homes sold for more. The median is not the most accurate figure for actual price declines as it is very broad. Prices are declining, nobody can pin point exactly how much so far, and how much further we have to go.

    2. zoiks

      Hi NewToTheArea…

      You ain’t from ’round here, are ya? Oh yeah your name is NewToTheArea…

      Anyhoo, there’s 2 things you need to understand:

      1) You and your wife are living below the poverty line, at least as far as Irvine is concerned. You need to double your salary immediately or get out before you starve to death.

      2) The thing you need to understand about Irvine is that housing busts are a non-Irvine phenomenon. Irvine is different. Just ask ipoplaya.

  15. NewToTheArea

    The data key for my above post didn’t come out right.

    It is:

    City Zip Median Price Percent decline then

    Number of homes sold and Number Sold decline

  16. lowrydr310

    Keep drinking your f*ing Kool-Aid! The 2001 purchase price is what this home is really worth, and don’t let anyone fool you into thinking otherwise.

    Sure you have more than a handful of high wage earners in Irvine to support higher home prices, but the smart way to manage your money is NOT to piss most of it away on an overpriced home.

    Say what you want, but I’m sitting back and enjoying the wicked ride back to reality. Back in the late 1990s, what was stopping people from buying dirt cheap homes? Incomes in SoCal were still higher than average then, yet for some reason the demand was much less.

    1. ipoplaya

      “Back in the late 1990s, what was stopping people from buying dirt cheap homes? Incomes in SoCal were still higher than average then, yet for some reason the demand was much less.”

      The answer is probably high mortgage rates. Back in 96-97, conforming 30-year rates were around 8% or into the low 8% range. Contrast with today, where they are below 6%…

    2. GaMike

      Demographics my man, and the interest rates. The 90’s were different in those two very important ways.
      The big story, for California and places like Atlanta where I am, is the changing demographic picture. As people move in they need places to live. Everyone rather have a house, than an apratment. Lots of singles now want houses also. Builders are slow to catch up with demand, so prices rise. Then builders switch on the turbo boosters and build way too much, or in GA’s case build too far from the jobs.
      We (GA) are in better position than CA in that our prices didn’t rise so much, mainly because we didn’t have natural boundaries. But those outlying areas in Atlanta are feeling the hurt.
      But the people are still moving here from Cleveland, Michigan, etc. So they still need houses. Not sure how your area looks people wise.
      But look to the demographics, which also now include lots of downsizers to see how this should play out.

  17. Genius

    For $1mil I’ll take some land k thx. I realize this is socal and it’s a bit crowded, but I draw the line when my home is being sodomized by the house next door.

    products72 was my magic word.

  18. NewToTheArea

    Thanks for the reply house on legs,

    I just find it baffling how everything around Irvine in these stats shows such drops and somehow Irvine hasn’t quite tanked with the other cities.

    IRVINE RENTER, could you please shed some light on why the surrounding areas including Newport have stats showing big declines, but Irvine has not quite yet?

  19. BrianH

    I will admit that I don’t everything about the mortgage world after 10 years of being a front line residential loan officer. However, I have never heard of a 2/28 Option ARM. There are 2/28 loans that were a fixed rate for 24 months and then turned into an adjustable loan. There are Option ARMs that are monthly adjustable rate loans but as far as I know there is no combination of the two.

      1. BrianH

        See, the interest rate, like mentioned above, starts adjusting from the first month. The minimum or Negative Amortizing payment option can be fixed for 12 months, 24 months or whatever. There was even a few banks pushing a 5 year fixed NegAm payment. That doesn’t make the loan a 2/28 or a 5/25.

        All I’m pointing out is that you need to make sure you are talking about the correct thing and a 2/28 Option ARM doesn’t exist. A NegAm option ARM is what it is. I also see all the time people talking about the idiots who purchased 100% zero down on a subprime Option ARM. I know that a few subprime places had option ARM’s but none went 100% LTV that I’m aware of.

  20. Headless Unicorn Guy

    Think about the ramifications of that belief and the decision it influenced: Homeowners who did not take out their equity and refinance with Option ARMs are not going to be in financial trouble, and they will keep their homes. Those that did take out their equity are going to lose their homes.

    It’s election year. Those that did take out their equity in ever-increasing cash-out refis will get bailed out by the Government. (So will their new Beemers, 80″ Plasma-screens, and speedboats all paid for by the refis.) Only us stupid suckers “who did not take out their equity and refi” and lived within our means will get the Kancho.

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