Oh BOY!!

[capeman]

Somebody bring back that 5 year loan reset schedule… we're already breaking records on foreclosures and the peak reset time is not till about Xmas. This is going to be ugly with records broken for at least 4-6 quarters! Sorry to print all of this but it gives you the gist without having to register on the WAPost.com. Here is the link anyways…

http://www.washingtonpost.com/wp-dyn/content/article/2007/06/14/AR2007061400513.html?nav=hcmoduletmv

 

 

Foreclosure Rate Hits Historic High

By Dina ElBoghdady and Nancy Trejos

Washington Post Staff Writers
Friday, June 15, 2007; Page D01

 

The percentage of U.S. mortgages entering foreclosure in the first three months of the year was the highest in more than 50 years. according to the Mortgage Bankers Association.

As the association released its numbers, the Federal Reserve held a hearing to determine whether regulators could do anything to crack down on abusive lending practices, which have exacerbated the problem.

The problems arose last year as the housing market softened, driving down home prices and making it more difficult for cash-strapped borrowers to sell their homes or refinance their way out of trouble.

The most dramatic fallout took place in the subprime market, which caters to people with blemished credit or other factors that make them a risk to lenders.

Those borrowers entered foreclosure at a rate of 2.43 percent, up from 2 percent the previous quarter. The percentages seem small, but they are far above norms, particularly in a healthy economy. The concern is that the mortgage industry's troubles could damage the economy if they are not contained.

For more credit-worthy, prime borrowers, foreclosures rose slightly, to 0.25 percent, in the first quarter from 0.24 percent in the previous one.

New foreclosures for prime and subprime borrowers combined hit record highs. They rose to 0.58 percent on a seasonally adjusted basis, compared with 0.54 percent in the previous quarter and 0.41 percent a year earlier.

The high translates into about 254,591 mortgages, or one in 172 loans, the association said.

The problems weren't uniformly spread around the country. Doug Duncan, chief economist for the mortgage bankers group, said the rate of new foreclosures would have dropped had it not been for big jumps in California, Florida, Nevada and Arizona. He said high rates in Ohio, Michigan and Indiana also drove up the overall percentage of loans in foreclosure.

Some who track the industry say the worst is yet to come.

"We think we're just starting to see the tip of the iceberg," said Karen Weaver, global head of securitization research at Deutsche Bank Securities. "We believe more and more [subprime borrowers] will default, and that's a process that we think will happen over two years."

 

 

[no_such_reality]

The problem isn’t a soft market.

The problem isn’t a shady broker.

The problem isn’t a bad loan.

The problem is the buyer took a loan that they could not afford the payment on once the teaser rate ran out.

That is the root of the problem.

[no_such_reality]

The problem isn’t a soft market.

The problem isn’t a shady broker.

The problem isn’t a bad loan.

The problem is the buyer took a loan that they could not afford the payment on once the teaser rate ran out.

That is the root of the problem.

[drunkle]

there’s nothing to see here. there’s no problem in real estate. move along. move along. move along.

[drunkle]

there’s nothing to see here. there’s no problem in real estate. move along. move along. move along.

[temeculaguy]

“These are not the droids you are you looking for”

[temeculaguy]

“These are not the droids you are you looking for”

[NotCranky]

A related story:
A friend of mine told me at a party last week that his loan resets in July and he will be in big trouble. He called me this morning his bank had called him to ask if he was ready for the reset. He has never missed a payment no lates nothing at all. He told them his current payment was a big struggle and the reset was going to kill him. They told him someone would call in three days to work it out, at less that his current payment! The lender was Chase.

[NotCranky]

A related story:
A friend of mine told me at a party last week that his loan resets in July and he will be in big trouble. He called me this morning his bank had called him to ask if he was ready for the reset. He has never missed a payment no lates nothing at all. He told them his current payment was a big struggle and the reset was going to kill him. They told him someone would call in three days to work it out, at less that his current payment! The lender was Chase.

[Anonymous]

Sounds like your friend got very lucky — unless there’s the Mother Of All Balloon Payments lurking — or there is some title shenanigans.

Maybe Chase is on the hook for some mortgage insurance they wrote on some massively levered CDO’s, and they’re trying to screw the hedgies who correctly saw the terminal implosion?

And your friend is lucky enough to have a bond in the CDO basket.

[Anonymous]

Sounds like your friend got very lucky — unless there’s the Mother Of All Balloon Payments lurking — or there is some title shenanigans.

Maybe Chase is on the hook for some mortgage insurance they wrote on some massively levered CDO’s, and they’re trying to screw the hedgies who correctly saw the terminal implosion?

And your friend is lucky enough to have a bond in the CDO basket.

[patientrenter]

Rustico,

I know 1992-1997 saw a lot of mortgage defaults and forced sales, but my suspicion is that this time around the efforts that will be made by banks, investors, state and federal agencies to save homeowners will be very different and much bigger. If the downward wave is too big, it may overwhelm them all, but I wouldn’t call a rout a sure bet quite yet.

Patient renter in OC

[patientrenter]

Rustico,

I know 1992-1997 saw a lot of mortgage defaults and forced sales, but my suspicion is that this time around the efforts that will be made by banks, investors, state and federal agencies to save homeowners will be very different and much bigger. If the downward wave is too big, it may overwhelm them all, but I wouldn’t call a rout a sure bet quite yet.

Patient renter in OC

[NotCranky]

Patient: There are a good number of REO’s out there already as I am sure you are aware.The current NOD’s will probably add significantly to those numbers. The other day Perry made a thread that had a quote from an Reo guy telling how desperate they were to try not to drive down comps with these houses. Sooner or later they are going to have to let them go at a faster pace. My guess is they are doing all the damage control possible behind the scenes first.I was alive and well in the last bust and have made the mistake of thinking things are going to follow the same script,there were bargains by now. There aren’t anything like comparable bargains yet that’s for sure. I bought a house in 91′ for 38% less than the previous owner did and it rented for almost twice my mortgage after 10k materials and appliances and some DIY repairs.

[NotCranky]

Patient: There are a good number of REO’s out there already as I am sure you are aware.The current NOD’s will probably add significantly to those numbers. The other day Perry made a thread that had a quote from an Reo guy telling how desperate they were to try not to drive down comps with these houses. Sooner or later they are going to have to let them go at a faster pace. My guess is they are doing all the damage control possible behind the scenes first.I was alive and well in the last bust and have made the mistake of thinking things are going to follow the same script,there were bargains by now. There aren’t anything like comparable bargains yet that’s for sure. I bought a house in 91′ for 38% less than the previous owner did and it rented for almost twice my mortgage after 10k materials and appliances and some DIY repairs.

[Author]

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