Sunday, May 04, 2008

Foreclosures on Subprime Fixed Below 1999-2004

The chart above (click to enlarge) is from a new study by the CBO, showing foreclosures by type of mortgage through QIV 2007. As the chart indicates, the real mortgage problem is pretty much contained to subprime ARMs only, which make up less than 5% of the 75 million homes in America. Although foreclosures increased for Subprime Fixed mortgages in 2007, the 1.5% rate in late 2007 was actually at or below the peak levels from 1999 to 2004. Prime ARM foreclosures increased in 2007, but reached a level of only about 1% by the end of 2007.


At 5/05/2008 3:01 PM, Anonymous Kevin said...

I wouldn't go so far as to say that the problem is contained to subprime...

I'd simply say that as of the end of last year it was still contained to subprime.

Nothing in this data can tell us anything about current containment.

Am I picking nits? I don't think so.

Clearly, the Prime ARM foreclosures were moving up and were already more than double their previous high in the graph. Did it stop there, or did it follow the same form of curve as the suprime ARM's?

If that really was the peak: great! If it followed a similar curve to subprime ARM's, then prime ARM foreclosures may now be running higher than subprime FRM's: not so great.

What's the real story? Time will tell, but it's too early to decide based on this study.


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