In this example they have been in their home for over 7 years and have invested a good amount of money into the home. They won't be walking. But this is only one case of millions.
Also at that time they could have chosen and qualified for fixed BUT they chose wrong. This was during the time where interest only loans were being heavily pushed by ALL banks. When I refinanced I got the soft sell but the Interest only was always brought up. I remember at the time thinking he was crazy not to get a fixed....and I told him that. It's sad. Now the home value has fallen making re-fi impossible without adding 10's of thousands of dollars cash to equity. They are stuck with the loan until home prices rise enough to re-fi.
Could be, but as pointed out below the loan resets from interest only to a term payment. A lot of those homes bought with option ARM's were never intended to be held that long, the owners never could have afforded a conventional loan in the first place, they'll walk.
I was helping someone at my work try to get a loan modification. The loan was a 5 year fixed rate interest only that resets to 1yr treasury ARM + 2.75 pts with a cap. around 10%. When his loan initially resets in Jan likely his interest rate goes DOWN. But his payment will go up as he was paying interest only before and now he would be paying a regular P+I. It still would be manageable but there is risk to a rising interest rate at some point. This is just one example.
was for this year only. The management can not know the future. For example what if another default on a loan happens Ect..
They hope things will continue to be ok and they would love to grow the dividend if possible. Makes them look good and they feel justified in giving them selves more management fees ect...
My hope is they do not lower the dividend again. Since I have owned it it has gone from .41, to .39, then to .30, and now at .25. it would be nice if we at least stay at this level
Hope you do well
Do you read what you write?
In response to management's telling us the dividend would be money good for a year, you wrote,
>"The promise was for this year only. The management can not know the future."<
If management cannot know the future, how did they make the "promise for this year?"
The fact is that our dividend is currently at $0.25, and our CEO has said that rather than concentrating on maintaining the dividend, he hopes to "grow" the dividend.
So, with respect to the future, our CEO has already suggested a quarter or two at $0.25 and then increasing the dividend.
How hard is this to understand? I realize you are not the only person here who does not seem to get it, but I cannot imagine why anyone does not understand what the CEO says so clearly in the CC.
I think the good stats are just a random blip upwards, and the tunnel is about to collapse. It takes awhile before all the damage done gets sifted down. I see more and more commercial space coming empty around here every week. People hang on as long as they can, the downward spiral's got a couple years left before capitulation I figure.
That's the key to the stock price. If the current dividend is deemed sustainable, this stock could rise to $9 to $10. If there is life after the CDOs as time goes on, then the stock will react accordingly.
It is an open question obviously, but no way does this ever hit $10 in the near future. There will always be a yield premium for the perceived risk of holding notes until the real estate crisis is over, and we're a far sight from that.
I just hope the stock price stays muted so as not to tempt REXI into another disastrous equity offering like the last three ring flopomatic. So long as the number of shares does not rise dramatically, and so long as there are no serious problems with the five securitizations, a buck is pretty much guaranteed. They have to flush out taxable income after all, and this company has no shelter against cash flow being income, ho hard assets to depreciate for example, like RAS and NRF.