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FRED
10-19-07, 04:36 PM
http://www.itulip.com/images/deadowner.jpgGiving away gold coins in these contests is getting expensive. No big deal in the old days when gold was trading at $270. But with the world's central banks, led by the Fed, playing Race to the Bottom with the world's major currencies, these English Sovereigns ain't cheap anymore. They were $80 when we started, now $180.

With the housing market crashing on schedule and in line with our Jan. 2005 forecast (http://itulip.com/forums/showthread.php?p=15495#post15495), it's time to challenge the iTulip crew–in our opinion the smartest finance and economics community on the whole Web–to tell us: Which bank or lender will be the first to offer a 100 Year Mortgage?

The 50 Year Mortgage debuted April 2006. As Holden Lewis at Bankrate.com (http://www.bankrate.com/brm/news/mortgages/20060427a1.asp) reported then:

Half of first-time home buyers are 32 or older, according to the National Association of Realtors. If those buyers get 50-year mortgages and never refinance or make extra payments, they won't pay off their loans until they're well into their 80s. Would they be crazy to get loans that amortize or pay off the balance over 50 years instead of the standard 30 years? Not at all, Diaz says.

"Getting a 50-year loan is a perfectly rational way to avoid an interest-only or payment-option adjustable-rate mortgage," he says.http://www.itulip.com/images/gold_sovereign.gifPerfectly rational. Let's take "rational" to the extreme. If you have to choose between defaulting on your mortgage and giving up your home or extending your mortgage out to 1200 affordable monthly payments, which are going to do? Why the perfectly rational thing, of course!

As the dollar sinks and long term interest rates rise to price in inflation and, dare we say, default risk, homes become even less affordable on a monthly basis as mortgage rates rise.

Remember, the Monthly Payment Consumer (http://www.itulip.com/glossary.htm#M) debt serf couldn't care less about the total price of anything, only the monthly cost.

When long term interest rates, such as on 10 year treasury bonds, rise to 10%, the monthly payment on a 30 year fixed rate mortgage will be out of reach for Joe Home "Owner" when he tries to switch out of a balooning adjustable rate mortgage and into a nice, stable fixed rate mortgage. It won't help him one bit if the price of his home falls 30% from the time he bought the home with a 3.4% teaser rate with an ARM–he'll still be stuck refinancing the old, underwater mortgage.

The Japanese style 100 Year Mortgage is just the thing to bring the monthly payment on "his" home into range, and keep him paying until he's rotting in his grave.

Forget a lifetime of debt. Soon millions will enjoy an afterlife of debt. Call it the Afterlife Mortgage.

Each registered iTulip member gets to post the name of one bank or lender they believe is most likely to be first to offer the 100 Year Mortgage. If the bank you choose gets acquired, then your guess transfers to the acquiring bank or Resolution Trust Taxpayer Bail-Out Company or whatever. In case of a tie, the first poster to post the winning name wins. This thread closes to posts in one week. Good luck!

(Sorry, iTulip employees, contractors, writers, sponsors, and affiliates are not eligible to play.)

Sapiens
10-19-07, 05:17 PM
Bank of America.

Chumplor
10-19-07, 05:27 PM
Washington Mutual

jimmygu3
10-19-07, 05:42 PM
Countrywide

I would also expect to see other exotic products proposed to avoid write-downs, short sales and renegotiated balances. Banks will be willing to take whatever blood they can get from stones as long as they don't have to drop the principal balance due. How about an indefinite-term inflation-indexed mortgage with an artificially low initial payment that increases each year with the CPI. All the while interest is compounding away.

metalman
10-19-07, 05:52 PM
Statewide Bancorp

don
10-19-07, 06:01 PM
I'm stuck with Wells Fargo. WaMu's been taken!

Andreuccio
10-19-07, 06:12 PM
Wachovia

Plus a few extra characters. Apparently 10's the bottom limit.

FRED
10-19-07, 06:14 PM
I'm stuck with Wells Fargo. WaMu's been taken!

Might be a mid tier bank.

rzero
10-19-07, 06:32 PM
My answer may not be eligable, but:

Nobody. The 50 year mortgage will disappear before the 100 appears.

Andreuccio
10-19-07, 06:33 PM
Might be a mid tier bank.

Just out of curiosity, are you sure it's going to happen anytime soon? That 50 year mortgage was over a year ago. I keep reading now that mortgages are harder to get because they've tightened up standards a bit. How would this be tighter?

raja
10-19-07, 07:00 PM
Chase Bank

Jeff
10-19-07, 09:04 PM
Citibank. (The good ones were taken.)

rlskaggs2003
10-19-07, 09:09 PM
Bank United - if they survive

DemonD
10-19-07, 09:23 PM
metalman beat me to it - see entry below

RebbePete
10-19-07, 09:25 PM
GMAC. Gotta pay for those retirees pension benefits by some exotic scheme!

rj1
10-20-07, 12:40 AM
Wachovia

Plus a few extra characters. Apparently 10's the bottom limit.

Damn you. :D

First Citzens.

metalman
10-20-07, 12:50 AM
Statewide Bancorp
http://www.statewidebancorp.com/

They were the first to offer the 50, so I'm going to them for the first to 100.

(Incidentally my first thought was the same as Sapiens - BofA - but after further thought, I now believe that BoA and other major banks have too much inertia to be creative enough to offer this. And also a hundred year loan is likely to be riskier too, so again a regional bank might be willing to roll the dice more than a major one. The fact that EJ indicated this backs up my presumption.)

good call, but i beat ya to it... http://www.itulip.com/forums/showthread.php?p=18017#post18017

what fred says about looking to the mid tier banks makes sense. they have to compete with the big boys... be more creative.

JKD
10-20-07, 04:06 PM
National City Bank

DemonD
10-20-07, 06:28 PM
dammit metalman, you're right. can I change mine? lol. I'm going to go with First Federal bank of CA

Sapiens
10-20-07, 09:48 PM
Actually it will be a government program, just like FHA popularized the fixed 30 year mortgage.



http://www.fdic.gov/news/news/speeches/chairman/spjun1107.html

The Federal Housing Administration (FHA) popularized the 30 year fixed rate mortgage in the 1930s following disruption in the U.S. housing industry during the Great Depression. Relatively short term balloon mortgages were the norm prior to the Great Depression. On most such balloon mortgages, principal was at most only partially amortized at maturity, leaving the borrower with the challenge of refinancing the balance. This system of mortgage lending resulted in a lengthy period of defaults and foreclosures. It has been viewed as having contributed to and perhaps even deepened the Great Depression.

The FHA’s 30 year fixed rate mortgage introduced the concept of a standardized, long-term, self-amortizing, home loan that allowed homebuyers to lock in fixed, affordable monthly payments over the entire duration of the loan. The 30 year fixed rate mortgage was extremely popular and became the standard loan product of the U.S. housing industry. It allowed millions of Americans to build equity in their homes over their working lives and accumulate assets for retirement.

normxxx
10-20-07, 10:35 PM
Who needs a 100 year mortgage? Isn't the interest-only mortgage a perpetual mortgage? Sure beats a 100-year mortgage.

jimmygu3
10-21-07, 12:17 AM
Who needs a 100 year mortgage? Isn't the interest-only mortgage a perpetual mortgage? Sure beats a 100-year mortgage.

No, a typical interest-only mortgage is a 30-year loan with an interest-only period of 10 to 15 years, followed by re-amortization of the remaining balance over the remainder of the life of the loan.

In reality, a 100-yr mortgage might as well be a perpetual interest-only mortgage, as 99.7% of the initial payment goes to interest. Another thing to clarify is that the 50-year mortgages out there are 5/1 ARMs, not fully amortized fixed rate loans. This will certainly be the case with 100-year loans.

metalman
10-21-07, 09:51 AM
No, a typical interest-only mortgage is a 30-year loan with an interest-only period of 10 to 15 years, followed by re-amortization of the remaining balance over the remainder of the life of the loan.

In reality, a 100-yr mortgage might as well be a perpetual interest-only mortgage, as 99.7% of the initial payment goes to interest. Another thing to clarify is that the 50-year mortgages out there are 5/1 ARMs, not fully amortized fixed rate loans. This will certainly be the case with 100-year loans.

the point of the 100 yr mortgage is the same as the 50... make the payments smaller but in a way that is not risky for lenders.

0tr
10-21-07, 12:57 PM
"Each registered iTulip member gets to post the name of one bank or lender they believe is most likely to be first to offer the 100 Year Mortgage.


I vote for the traditional lender of last and first resort, mom and pop (or any relative, grandparents, uncles, aunts, &c). Lender is sufficiently broad as to include all or any lenders, n'est ce pas?

And so I'd say the open ended (after life) mortgage already exists.

jk
10-21-07, 08:02 PM
downey financial

dauphiné
10-22-07, 09:11 AM
Swiss Bank !

In Switzerland, 50 years mortgages have been around for a while...

Viking
10-22-07, 10:32 PM
HSBC. Can I get an AMEN?!

hayfield
10-22-07, 10:49 PM
With no investors to buy year 2108 maturity MBS, what bank would be crazy enough to offer such a product?

Maybe in a moment of boardroom desperation, the product would blip into existance before the offering bank went kaput.

Anyway, it could happen, how about a credit union?

DCU (https://www.dcu.org/index.html)

Uncle Jack
10-23-07, 12:00 AM
Was already discussed in March of this year.

http://tinyurl.com/2gx28l

See the many positive responses to this "modest proposal."

I'll take IndyMac.

Viking
10-23-07, 11:53 AM
I think that defined benefit pension funds and endowments might purchase such instruments - in moderation, of course.

Goldenhands
10-23-07, 04:49 PM
Washington Mutual. No Doubt. Why? Because I live in the Seattle area and the fear is that someone at the Bank will finally tell the truth. The only way to keep the lie of this area's Real Estate market alive is a "Super Mortgage" exactly as Fred describes. My vote goes to the ONE Bank so far up to their eyes in the lie it can't be described any other way than deperate hope.
No.. I have no hatchet to bury, not an employee or other, just plain simple
numbers tell the story. WaMu is on the chopping block along with Puget Sound's Credit fairyland. See you on the other side fellow Goldbugs!!!!

olivegreen
10-24-07, 09:18 PM
"Bank of America" It has a mandate, I kid you not, to be the "world's most admired company"... not the biggest, not the best, but the "most admired". With moxy like that, I suspect they will own the world...

Thallid
10-30-07, 09:21 PM
Does this guy's buyer qualify as having an undead mortgage?



A house deal to die for? (http://www.post-gazette.com/pg/07302/829344-30.stm)
Home sellers offer a full refund when they pass on -- one more gambit in a sluggish market

Jay
10-30-07, 11:28 PM
Hudson City Bancorp, a growing thrift now in the S&P 500. The 50 year is their misguided effort stay there.

Ann
10-30-07, 11:57 PM
Does this guy's buyer qualify as having an undead mortgage?

There's something basically sad about this deal.

trillium
09-26-08, 01:37 AM
Afterlife mortgages are already available at Bank of the Afterlife, here: http://www.bankoftheafterlife.com

Chumplor
09-26-08, 10:29 AM
Washington Mutual

Given the news today, I guess I don't win.