Wednesday, May 20, 2009

S&P 500 at Critical Point

The dashed line is the closing price today (May 20, 2009). The market is only off 42% from the peak.
The S&P has just turned down below its 200-day moving average. Not a good sign for the bulls!

New Mortgage Loan Reset / Recast Chart

Matt Padilla at the O.C. Register presents a new reset / recast chart from Credit Suisse: Loan reset threat looms till 2012

Credit Suisse is using recast dates for Option ARMs and reset dates for all other loans.

As Tanta noted: "Reset" refers to a rate change. "Recast" refers to a payment change.

Resets are not a huge problem as long as interest rates stay low, but recasts could be significant.

Note that Wells Fargo expects only a small percentage of their $115 billion "pick-a-pay" Option ARM portfolio they acquired via Wachovia (originally from World Savings / Golden West) to recast by 2012 (because Golden West had very generous NegAM terms). I'm not sure how that fits with this chart.

Wednesday, May 13, 2009