Monday, March 17, 2008

Some Perspective on Subprime Mortgages

The graph above was created using data from the Mortgage Bankers Association's (MBA) most recent release on delinquencies and foreclosures, and a previous MBA report here. Facts:

1. Of the 75.2 million American homeowners, 25.6 million, or 34% of the total, own their homes free and clear.

2. Of the 75.2 million homeowners, 39.6 million, or almost 53% of the total, have prime mortgages (fixed and adjustable).

3. Of the 75.2 million howeowners, 65.2 million, or almost 87%, have a prime mortgage or no mortgage. Add in the 3.5 million FHA loans, and it brings the total percentage to 91.4%.

4. Subprime borrowers (6.5 million) make up the rest, or only 8.64% of all homeowners, and only 4.65 out of every 100 homeowners has a subprime ARM, which make up almost half of the foreclosures started.

5. Of the 49.6 million mortgages, 2.04% were in the foreclosure process in the fourth quarter of 2007, or about 1.01 million homes. Of the total number of homes (75.2 million) including those with no mortgage, the percent of all homes in foreclosure was 1.34%. Obviously then, 98.66% of homes were NOT in the foreclosure process in QIV 2007.

(Updated: March 20, 2008)


At 3/18/2008 2:18 AM, Anonymous Anonymous said...

sure but what is the distribution of defaults among the various sub-groups of mortgages?

At 3/18/2008 5:56 AM, Anonymous Anonymous said...

Revisit the issue in 9 months after the subprime resets peak later this year. To use a baseball analogy, it's the bottom of the third inning this summer.

At 3/18/2008 10:17 AM, Anonymous Anonymous said...

Widespread instituionalized fraud is the real issue but no one wants to talk about that.

The government will bail out banks and investors while leaving poor dumb Americans to fend for themselves in a stinking pool of personal responsibility.

We've already spent a trillion (1,000,000,000,000.00) dollars in the last 9 months propping up a diseased, corrupt and failing financial system.

What is another trillion dollars when tax cuts can increase tax revenues and make everyone happy in a Goldilocks economy.

At 3/19/2008 4:42 PM, Anonymous Anonymous said...

Very encouraging data. But what would it look like if home equity loans were included?


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