Majority Of S&L Profits Neg-AM, ‘Non-Cash’
National Mortgage News has a link to an American Banker story on option ARM’s. “For home lenders, 2005 may go down as the year that disclosure of details on option ARMs began to achieve critical mass. Information on activity in the niche had long been elusive; among the biggest participants, Downey Financial Corp. was notable for the amount of information it had provided in past years.”
“A survey of top option-ARM lenders’ 10-K filings by American Banker shows that much more data is now available, including figures on topics to which regulators and investors are paying close attention: deferred interest and related negative amortization.”
“All the leading lenders in this niche provided evidence that principal-balance growth on such loans surged last year as many borrowers made only minimum payments. In their 10-K filings released last month, Downey along with Washington Mutual Inc. led the pack in giving details about option ARMs.”
“Salient figures in the Downey 10-K: Ninety-seven percent of the $133 million of deferred interest outstanding came from loans with balances above the original principal amounts, and the company generated 62% of its profits from noncash income from deferred interest.”
“About $13.4 billion, or 91%, of Downey’s one-to-four-family residential loan portfolio could experience negative amortization, up from 82% a year earlier. By balance, about 10% of the loans experienced negative amortization without exceeding their original balances, while 64% negatively amortized above them.”
“By offering the average age of the loans with this breakdown, Downey revealed its older option ARMs were less likely to amortize negatively; those not using negative amortization were, on average, 21 months old, versus 15 months for those that were.”
“This may be surprising, considering the common teaser periods, which generally preclude balance growth. But it could be taken to mean borrowers who took out the loans after the recent home price surge did so because they needed to rely on the minimum payments.”
“As of July 31, 2005, Downey operated 173 branches, of which 169 were in California and 4 were in Arizona.”
Thanks to the reader who sent in this tip.
From the Orange County Register on commercial lending:
‘Commercial lending is booming as developers rush to keep pace with the demand for office buildings and malls, but some lenders are starting to worry. Lenders and investors in mortgages are losing their enthusiasm for these commercial loans.’
‘Steve Beck, senior vice president in the Irvine office of GMAC Commercial Mortgage said commercial real estate prices should hit a ceiling soon, and he isn’t ruling out price dips in the county.’
‘Returns on the county’s nicest buildings have lost much of their comparative value, he said. Returns - essentially rent divided by the sales price of a building - have dipped to nearly the same level as risk-free yields on U.S. Treasuries, he said. And no one calls a bondholder to ‘fix the garbage disposal,’ Beck said.’
‘Lisa Pendergast, real estate analyst at RBS Greenwich Capital Markets, said the effect of aggressive lending is unknown: ‘We don’t know how quickly and to what extent rates will back up and how fast property values will decline,’ she said.’
Take a look at these guidelines from the Office of Thrift Supervision:
http://www.ots.treas.gov/resultSort.cfm?catNumber=94&catParent=10&doc_cat=11&showDocname=y&sel=8
In order to maintain a
portfolio that is not exposed
to excessive credit risk,
lenders are advised to
monitor the proportion of
borrowers that are making
minimum monthly payments
that result in accruing
negative amortization. A
sharp increase in the
proportion of borrowers
making minimum payments
is an indication that credit
risk trouble may be looming
not too far in the future. In
addition, lenders should use
loan-level data to track the
performance of loans by
loan program and
origination year.
Looks like they aren’t supervising these people above very well…
Do any of the more financially savvy bloggers have a simple way to describe negative amortization to the masses that read Ben’s Blog??
I was at a dinner party the other night… the subject came up, and most at the table didn’t realize that people that take A.R.M. loans can actually OWE MORE THAN THE ORIGINAL AMOUNT they agreed pay for the home… due to negative amortization.
I would rather ask a fellow blogger to ELOQUENTLY give us an example of the FATE of many of these loans. Perhaps a true math example, say a 300K adjustable rate mortgage. Thanks in advance.
Consider your $300K adjustable rate mortgage at, say, 5% initial interest rate. If my option ARM says that I can skirt by for the first few years with an interest-only payment of only 3% interest per year, then my lowest possible initial monthly payment equals
3% X $300K / 12 = $750/mo,
but at the end of the year, I have added on
2% X $300K = $6000
in deferred interest to my principle balance (and to the asset column in the lender’s balance sheet!). Through the magic of compounding, I will accrue additional interest on this $6000 going forward until I repay it, along with everything else I owe the bank.
For a layman’s explanation of adding deferred interest to the loan balance, you can say that it is like what would if you put $300K into a savings account at 2% / year; at the end of one year, there will be $306K in the account. Only in this case, the homeowner owns the bank the extra $6000, not the other way around.
I think this explanation captures the concept, but I defer to the expertise of industry professionals if you need more realistic numbers for your example.
You got it GS. Additionally, these loans eventually get “recast” at 110% - 125% to conventional 30yrs when the neg am amount reaches the trigger. That means years later the $300K mortgage becomes $330K - $400K (depending on the trigger) conventional mortgage (the lender always wants principal and interest back at some point). Where will home values be then?
But depending on the loan, isn’t the rate also adjusable upwards to some ungodly number which also contributes to the escalation in pricipal amount? This is like paying the minumum on credit cards, except with recourse. Sooner or later it gets called by the lender and the likely outcome is just about certain during a period of declining RE values where the loan exceeds any value.
A Big THANKS to Get Stucco, Jim and Rental Watch!!
I knew there were friendly bloggers that could help illustrate the true TOXIC nature of A.R.M. loans! I think these types of loans have become the ‘norm’ in a lot of high priced areas of the country and I don’t think many realize how dangerous it is to sign up for these things. Hopefully you have helped hundreds or even thousands that may be lurking on Ben’s site!!! Thanks again.
This is the kicker: banks record the unpaid interest as income!
That is pretty much the concept although the reality is that the fed imposed a ceiling on max interest rate on these loan. typically they are 11% or less. Most are in the 9.95% range. Given that this is the reality if prime was to rise and you are in this type of loan, your max exposure is 9.95%. When I do loan for people I calculate out the final amortization at the ceiling and let them know that maximum that they will ever have to pay. This way they can make an informed decision. There are however many loan officers and brokers who do not take the time to educate their clients on this.
I’m not elqoquent, and I’m not sure about fate this type of loan is pretty new. Essentially, a negative ammortization loan begins with payments that do not cover the interest accrued during the period. So that interest is added to the oustanding loan balance. Using your 300k ARM and an example rate of 6% a standard payment would be 1799.65, of which 1500 is interest for the month and 299.65 is principle this will increase each period and eventually pay off the loan. On a negative am ARM the minimum payment might be $1000 (but interest accrued was $1500) so after the payment the loan balance increases to $300,500 in this example. The bank will only let you accumulate loan balance for 5 years or 125% in most cases which ever comes first. At that time the loan converts to an ammortizing loan that will be paid off on schedule.
The reason they became popular with banks is that the suckers are almost always ARMs that adjust monthly so there is no interest rate risk in a low rate environment.
A Big THANKS to Get Stucco, Jim and Rental Watch!!
ADD BLUTO to that list! Thanks Bluto for your explanation. This stuff is really important to get out to the masses.
AHA! There’s a twist here. Any non-stupid lender will have a clause that defines the 125% accumulated loan balance in Bluto’s explanation. So if it is defined as 125% of original loan amount or current market value, whichever is LOWER, as it should be written, these borrowers are toast much faster as prices and comps tumble. I predict many will be in default from this clause much sooner than the date that would have been defined mathematically had prices not retreated. One of the dirty little secrets that is out there, unless the lenders were dumber than I thought.
$300k ARM, interest rate of 5%, but you only need to pay 2% as the “teaser”. You ACCRUE the other 3%. initially. Your cost is still 5%, but your cash flow burden is lessened . . . initially.
Your cash payment starts as $6k per year, or $500 per month. You accrue $9k per year ($750 per month).
If the initial payment period is 1 year, your principal balance becomes $309k after 12 months (a little more with monthly compounding), and if you then need to make a 100% interest only payment, you need to pay interest on the initial $300k as well as interest on the additional $9k that you didn’t pay the prior year. Instead of paying $1,250 per month from the start, you pay $500 per month for the first year, and then $1,287.50 thereafter.
That’s without the rate moving. If your rate moves from 5% to something higher, you pay even more. If you are an investor, you need to make sure that the market is moving 9% or more per year just to break even (3% negative am PLUS 6% sales commission).
I just want to say that the old style ARM’s of 20 years ago were not bad like this new style of ARM and Interest Only loans .I had a arm that averaged way below the fixed rate average for about 17 years because it only had a 2% margin over the costs of funds index.Now of course I have a fixed rate loan because that makes the most sense for the long term owner,
When I explain neg-ams, I actually refrain from using any numbers. The instant you begin to illustrate with numbers, I see eyes glaze over instantly. I go like this:
“In an interest-only loan, you pay only the interest each month, and none of the actual loan amount. Bad? Yes! But neg-ams are even worse: With a neg-am loan, you pay LESS THAN just the interest each month — so the amount of interest that you didn’t pay gets added to the loan amount. Hence, the amount of your loan grows every month by the amount of interest that you didnn’t pay.”
OC Max and Housing Wizard…
Good tidbits to add. I was also thinking about the repercussions of those that bought at the “peak” of 2005 with these loans. As property values correct to a more sustainable level… those that are in trouble with the neg am loans WON’T BE ABLE to refinance, because they OWE more than what the house is WORTH.
That’s where things are going to get real dicey.
What you learned over the course of that hour is why some of the more conservative financial analysts, people like Doug Noland, Peter Schiff and Stephen Roach (to say nothing of Mark Faber), have been sounding like Old Testament prophets for the last couple of years.
Good luck on the Lenders collecting the neg/interest if the market goes down in bubble areas . If a seller sells the seller has to bring money to the table . THe new age adjustables only work if property is going up 15 to 20% a year .You can’t base loans on the assumption that property always goes up .
Ironically, that’s how these guys have been able to promote their safety. They’ve pointed to the default performance of the loans, which has historically been low. Only problem is now, the appreciation wind isn’t at the back of the borrower now, so when he/she can’t refi out of a tight cash situation, they’ll go neg am and go out in a “blaze of glory”.
And the amount of interest you didn’t pay, and that the bank didn’t get, is added to the bank’s book as profit!! I still can’t believe this is legal, or meets GAAP rules, but it does! What are the profits of these banks if that paper profit, which they never received but expect to receive, never is collected? How many banks are near to being underwater?
Why is this a surprise? Most business transactions are not cash on the barrelhead but depend on a counterparty meeting their promised obligations.
I have covered this very topic many times on my blog.
Another F’D Borrower
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Keep in mind, we’re really talking about three different things here. ARM merely means that the interest rate on the loan adjusts to prevaliling rates bases on some index. Plenty of ARM loans are fully amortizing, and you are forced to pay down principal every month, although your payment may change considerably. Some ARMs are Interest Only, where for the introductory period, you don’t pay any principal and after the introductory period the loan starts amortizing. Say, for the first three years you pay no principal, and then you must pay either a baloon payment (these were fairly common in the high interest 80s) or the loan recasts so that you must pay the principal off over a 27 year span. There is often confusion because the initial fixed interest period is often not the same as the interest only period. The most toxic loans are “payment option” loans where one can pay less than the interest, until the loan ballance reachs some set limit, say 120% of the initial amount. It is my imperfect understanding that those “teaser rates” of 1% that are quoted are the amount of the interest that you must pay until you reach the loan limit, the excess interest is tacked onto the principal so that when it recasts you end up paying more interest on a larger amount of a loan that amortizes over a shorter period of time.
It is truly amazing to me that companies are allowed to book the unpaid interest on their books in the current year as if it was actually payment received. When this unwinds there will be hell to pay.
“Salient figures in the Downey 10-K: Ninety-seven percent of the $133 million of deferred interest outstanding came from loans with balances above the original principal amounts, and the company generated 62% of its profits from noncash income from deferred interest.”
As one of these FB’s might ask, “Deferred interest? What’s that?”
People aren’t paying enough to cover the interest on their loan. But the bank has “earned” the interest even tho they haven’t received it.
So the bank books the “deferred interest” as profit because, in theory, they will receive it in the future.
The whole house of cards comes tumbling down when a large percentage of the people with option ARMs never pay this interest. Eventually the bank has to restate earnings and, when they do, their share price will plummet.
Gee, where did we ever hear this before? Oh, I remember; Ben’s blog. Where haven’t we heard this before? Yup, in the MSM which is sooo late to this party it constitutes a failure of the Fourth Estate.
Maybe all this “deferred interest” should be reclassified as “subprime earnings.”
LOL
No, let’s call it “taxpayer liability.”
Groan!
Anyone can figure this out. Vinny the loan shark calls it vigorish. You borrow $100 and pay back $110 next Tuesday. Pay anything, anything less than $110 next Tuesday and you owe another $10 plus interest on the original balance. Credit cards do the same thing when they say “skip a payment month.”
“Vinny the loan shark calls it vigorish.”
At what point does Vinny’s friend Guido come along and threaten to break the FB’s legs if that deferred interest is not paid off?
Ben “The HELOCopter” threatens to fly over and dump a mountain of paper that pushes you underwater.
Seriously, this means “a restatement of earnings.” Anyone remember that lovely phrase? Unfortunately the markets in this case are stacked against us who are absolutely sure what is going to happen. How do you short DSL (Downey whom in the interests of disclosure I hate) when there is no time limit on when they are going to have to tell the truth? Can’t go short term because they can keep lying. Can’t go for a far out short because if you are too right they’ll get bailed out. I do know that Downey is stealing all our money at this very moment and there’s nothing to protect you. Multiply by thousands.
Heck, Mike the mortgage broker, http://themessthatgreenspanmade.blogspot.com/2006/01/no-rules-only-guidelines.html has a better car and better house than me. When things go wrong he’ll still have been in a better house and driving a better car than me for the last ten years.
Try a put option
yeah, vinny’s loans are like “option ARMS” without the option, unless it’s “we have the option to break your arms.”
The stock market is really on a roll these days, breaking out to new highs. The financial world is up-side down right now.
The stock market is doing well from all the liquidity (i.e. inflation) in our monetary system right now. I’m out of both the housing and U.S. stock market right now, betting on major inflation coming our way. With M3 now a secret, I would not be surprised if we have hyperinflation, with deflation in assets. We’re living in interesting times.
Footnote: I moved money into Precious Metals, their stocks, and out of the US$.
Hard to predict. I’m with you, putting money where my mouth is. Pretty crappy situation to be: saver, renter, high net worth, obscene tax rate. What if the Fed stops tightening? We’re screwed unless we hold something like gold, or want to take a chance on stocks. Been shorting builders, pretty ugly today but not enough to kick me out. But what if the Fed stops now? Our economy is fubar.
Imagine what will happen if the Chinese fail to show up at the next treasury auction!
If the financial system collapses, how can you get your money out of brokerage accounts? I”m thinking of moving all my money to euros. Any comments?
How about that? Anyone?
I’ll bet that there won’t be a one- or two-day run on the banks or brokerages like they had back in the 1920’s for anything but the most specific and devastating direct attack on the financial system. The 9/11 disaster didn’t cause a bank run, for example. And if you’re the kind of person who reads this blog, it’s almost axiomatic that you’ll be packing up shop, so to speak, way before the masses are.
That said, if you think that there could be some kind of singularity that would make the world stop, I think you don’t need to park everything in gold coins or cash in the mattress or anything like that. I myself have enough resources readily available to get by for three months, which has been my policy for a number of years; I figure if the financial system is screwed up for more than three months, the entire country at that point would be at least temporarily functioning under a whole new set of rules — official and unofficial, currently unpredictable in either case — anyway.
But you would also do well to have some kind of short position in place to be in a better position when they “turn the machines back on”. I really think long-term — the next year or so — you can be short one of the smaller homebuilders (less than $8B/year in sales) and sleep well (even after days like today).
we will either go down an inflation route or a deflationary route. I am out of the us market….in cash and intl stocks…..but 75% in cash….I would be interested in your inflationary concerns…the govt doesn’t see that.
Who’s buying?
- Hedge funds trying to lure sheep?
- Pension fund managers?
- Plunge protection G-men in black helicopters?
I just cannot get my brain around the disconnect between the stock market and fundamentals anymore…
Reading lots of mainstram publications, I have finally gotten my brain around it. Joe Sixpack, if he reads many of the publications like I’m reading such as Yahoo News, Time Magazine, CNN.com, etc., is reading all kinds of things about “strong job growth” and “phew — news just in, housing market will have a SOFT landing after all” and “April has historically ALWAYS been strong for the stock market” and on and on. That being said, it’s easy to see how Joe is fearlessly plowing into equities. Besides, the Dow has been hovering in the 9,500 to 11,000 range since 2000 — since Joe doesn’t have any real way to value the general market, it all makes sense to him that “it’s about time” stocks came back into vogue.
What little media Joe is consuming has put his mind at ease. Never mind Delphi, exploding housing inventory, record low housing affordability rates, suicide loans starting to finally amortize, rising interest rates, M3 mystery money, America’s negative savings rate, the federal deficit, worsening unrest in the Middle East (aka “unrest at the oil spigot”), the notion that a third of the jobs created since 2001 have been housing-related, or that consumer spending will taper back considerably if any one of the other items I just listed goes all wrong. Out of sight, out of mind. And as I typed this, Joe just clicked “execute market order”, buying another few hundred shares of Google and Lennar.
Yea, that is one good possibility. The other one I keep forgetting is all those builders’ stock buyback programs, which can be used to offset negative announcements…
http://www.ots.treas.gov/resultSort.cfm?catNumber=94&catParent=10&doc_cat=11&showDocname=y&sel=8
In order to maintain a
portfolio that is not exposed
to excessive credit risk,
lenders are advised to
monitor the proportion of
borrowers that are making
minimum monthly payments
that result in accruing
negative amortization. A
sharp increase in the
proportion of borrowers
making minimum payments
is an indication that credit
risk trouble may be looming
not too far in the future. In
addition, lenders should use
loan-level data to track the
performance of loans by
loan program and
origination year.
It’s not just Joe Sixpack, OC Max…you must be a city guy. You just described life in the burbs where we’re to live w/a big smile on our face and not discuss ANYTHING negative. It might disturb the children and ruin their childhoods.
Does anyone think the Greenspan put has (or will) morphed into a Bernanke put?
I’ve seen one or two straight-up-to-the-close-for-no-reason-whatsoever sessions since BB took over, but it’s too early to decide (however paranoically-influenced my reasoning is) whether that constitutes a pattern and whether it’s the FOMC or generic Big Money.
It would take quite some doing — two or three times every single week — to match the Greenspan / Rubin combination we saw back in bubble days. You could look at a graph and tell the very minute when the government numbers for the next day (typically the week’s unemployment numbers or the (mis)Leading Economic Indicators) were being faxed to Goldman Sachs et al. Made some good money just waiting for Everything To Start Going Up All At Once At Some Point For No Reason Whatsoever After 2:30 once I figured it out.
Booking deferred interest as income is like depreciation on a rental property. It seems nice at first, then the final reckoning comes and you realize you’ve just set yourself up for a monster tax bill on the “capital gains”.
This will just baloon the write offs they need to do when these loans default.
“This will just balloon the write offs they need to do when these loans default.”
Chalk this up as yet another nail in the “soft landing” theory’s coffin.
I recall doing bank audits in the 90’s as a young CPA. In fact I remember doing an audit for a mid size S&L and having the OTS or OCC post a sign on the door “NO WITHDRAWLS TODAY”. The bank had a significant commerical loan that was on non-accrual that the “owner” could no longer make payments on. The bank had an excessive amount of capital tied to the project and was short on cash for withdrawls. Our audit manager told us to pack our things up and get out. I assume there will be many stories like this in the coming years.
I guess it is a little early in the year to watch “It’s a Wonderful Life” again…
LOL.
Ha Ha. Don’t they start playing that just after Thanksgiving? Oh well, Thanksgiving…Santa Claus Christmas, whatever- someone’s bummin’
I got my own copy a few months back as part of one of those “10 Golden Oldies for $10″ DVD deals.
Funny you were bringing that up as I was wondering how many “Pottervilles” we’d be seeing in the not so distant future.
I remember the Governor of Maryland mandating a $1,000 maximum withdrawel per month from State charderedSavngs and Loans in the 80s. Similar to Fannie and Freddie, the government backing for the Insurance fund was implied only, but we ended up issuing government bonds to make depositors whole.
Is it just me, or does anyone else belive this is totally nutso? I mean, really truly unbelievable? Have bankers completely lost their marbles? Aiieeee…
If he were still alive, the philosopher Friedrich Nietzsche would just shrug his shoulders:
“Madness is something rare in individuals- but in groups, parties, nations, and epochs it is the rule.
Yes , yes and yes yes yes
if i’m not mistaken, most of the Option ARMs over the last couple of years were written so that minimum monthly payments could based on as low as 1% interest rate. It’s only been in the last several months that most of the major lenders have been requiring minimun payments based on 1.25% or 1.5% interest. they’ve been very popular due to the high housing cost in orange county.
PW,
Same goes for Santa Barbara. 86 % of the loans in the last couple of years have been ARM’s. Prices just got way out of whack for the average person to qualify for a good ol’ fashioned Conventional 30 year Fixed.
This is another big reason I believe in Bubbles in SB.
I will venture to guess that SB prices also got too high for the buyer to make much of a downpayment?
Yep. 20% down on a $1mil crackerbox doesnt grow on trees, but hey! that’s what the herd sees great about ARM’s and exotics… they don’t have to come up with much of a down payment!!
Qualifying borrowers on the teaser rates is just plain silly . If you can’t qualify for the house , you can’t qualify for the house .Again this kind of loan underwriting created false demand because these people will be forced to sell when they can’t afford the house . Guess what ….more homes on the market or homes that are foreclosure bound .
They don’t qualify on the teaser rate. They qualify on the I/O or 30 year amortization payment…but many of these are ’stated’ loans…so take it with a grain of salt.
I don’t know of a company that is/was qualifying borrowers on the minimum payment.
SoCalMtgGuy
I heard they were .
SoCal,
I was also told that people could qualify on the initial interest payment. I call various lenders, just to see what the “mortgage of the day is,” and they’ve said they can qualify me for a higher mortgage when using an ARM with a lower initial rate (as opposed to a FRM). I’m talking about the initial rate before it becomes fully indexed…at least that was my understanding.
Are you certain this is not the case, or am I missing something?
Yes this is what I was saying ,people are qualifying on the teaser/initial interest rate . This means that in alot of cases the borrower really doesn’t qualify for the loan based on the adjusted up interest rate .
I think you are confusing the initial ARM payment vs. the ‘minimum payment’ option on the option ARM.
Yes, lenders will qualify you on the I/O or initial ‘fixed’ part of an ARM…whether that is 2, 3, 5, 7 or 10 years. I have NOT seen a lender qualify a bwr for an option ARM on the ‘minimum payment’.
Does that help?
SoCalMtgGuy
But if they’re liar loans, what does it matter whether they “qualify”? What matters is whether the BORROWERs are calculating their ability to pay based on the minimum payment.
SoCal,
Yes. Thank you for clarifying. I was referring to the initial “fixed” rate (which may or may not be fully indexed for the fixed period??). The “teaser” rate on the neg-am is often around 1% (as you know), which I’m sure they are not qualifying on (I sure hope not!).
Then they stared at her. “Interest!” they cried.
“Interest on the money you still owe,” she answered.
“But we don’t have to pay any interest!” they exclaimed, three or four
at once. “We only have to pay twelve dollars each month.”
And for this she laughed at them. “You are like all the rest,” she said;
“they trick you and eat you alive. They never sell the houses without
interest. Get your deed, and see.”
Then, with a horrible sinking of the heart, Teta Elzbieta unlocked her
bureau and brought out the paper that had already caused them so many
agonies. Now they sat round, scarcely breathing, while the old lady, who
could read English, ran over it. “Yes,” she said, finally, “here it is,
of course: ‘With interest thereon monthly, at the rate of seven per cent
per annum.’”
The predatory house-selling racket in Sinclair’s The Jungle has often come to my mind in recent years as zero-down ARMs have become widely available.
This is very good.
I am referring to this:
Comment by oikonomikos
2006-04-05 13:58:49
“Then they stared at her. ‘Interest!’ they cried.
“’Interest on the money you still owe,’ she answered.
“’But we don’t have to pay any interest!’” they exclaimed, three or four
at once. ‘We only have to pay twelve dollars each month.’
“And for this she laughed at them. ‘You are like all the rest,’ she said;
‘they trick you and eat you alive. They never sell the houses without
interest. Get your deed, and see.’
“Then, with a horrible sinking of the heart, Teta Elzbieta unlocked her
bureau and brought out the paper that had already caused them so many
agonies. Now they sat round, scarcely breathing, while the old lady, who
could read English, ran over it. ‘Yes,’ she said, finally, ‘here it is,
of course: “With interest thereon monthly, at the rate of seven per cent
per annum.”’”
CLP and some of the best REITs are paying under 5.5%
why bother?