Are you thinking, “Wait until the neg-am resets hit”?

I asked a major title company to tell me how many neg-am loans there were in Encinitas, Carmel Valley, and Ranch Santa Fe, a good cross-section of the higher-end properties.

Here was the response:

There are 29,488 properties

Neg-Am Loans
SFR (Detached) – 682
Condo/Duplex (Attached) – 288
Total = 970

Pay Option ARMs
SFR (Detached) – 440
Condo/Duplex (Attached) – 190
Total = 630

That’s it, 1,600 out of 29,488, or about 5.4% of the properties have either a neg-am, or option-arm.

They confirmed that they read every single trust deed and ARM rider that gets recorded, whether it’s a purchase or refinance transaction.

There were 10,268 adjustable-rate mortgages, so the remaining 8,668 must be mostly the interest-only, 3-year to 10-year mortgages, the ones that lenders are modifying. Today I heard of a homeowner who was coming up to the end of his five-year term, and called Countrywide for advice. He got a five-year extension at 4.75% interest-only, at no cost!

He was so happy he took his wife to Hawaii for a week!

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