Another Wave of Pain From the Housing Bust

I've written many columns this year on the nonperforming loan issues at U.S. banks, and especially at the money centers -- JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C). In this column I will specifically examine the rapid increase in nonperforming closed-end second trusts. These are fully amortizing loans that are, in most cases, used for the purchase of a home in lieu of a portion of the down payment.

A typical structure here would be an 80% first trust combined with a 10%-to-15% second trust, which would reduce the home buyer's cash down payment to between 5% and 10%. A typical second-trust structure is a 20-year amortization with interest-only payments for the first five years -- and then, for the remaining 15 years, a full amortization with monthly principal and interest payments.   ...442 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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