Thursday, January 31, 2008

Subprime ARMs Are Only 7% of Loans Outstanding

Here's a follow-up graph to the one in the post below, this one is through 2007-Q3 for "foreclosures started," from the Mortgage Bankers Association(MBA). What is pretty obvious is that subprime mortgages in general are not the problem, but subprime ARMs that are the real problem. Subprime fixed foreclosures in 2007-Q3 were actually below the last peak in 2003-Q4, and still aren't much higher than FHA foreclosures. Foreclosures on prime fixed-rate mortgages haven't moved much at all in the last 5 years.

Fortunately, subprime ARMs make up only 7% of the total mortgage loans outstanding according to the MBA, or about one out of every 14 loans, and of those subprime ARM loans outstanding, about 1 out 20 were in foreclosure in 2007-Q3, or about 1/3 of 1% of all mortgages.


At 1/31/2008 7:45 PM, Anonymous Anonymous said...

Standard&Poors downgrades 5% of all US mortgages. Ooops. Those small regional and community banks will be forced to writedown, let alone the big kahunas.

Sheesh, even the pharmaceutical companies hold the toxic waste.

A major NYC commercial real estate deal blows up in one year.

Subprime is not contained.

At 2/01/2008 6:11 AM, Anonymous Anonymous said...

mortgage bankers, industry experts and nonprofit officials say that the impact of one particularly nasty kind of ARM -- called the Option ARM -- involving hundreds of billions of dollars of loans has yet to be felt. And, they say, it will hit "PRIME BORROWERS" and subprime borrowers alike.

Nice to hear that, and being this was last years disaster. the next one in wait is in comercial loans.

This is also why the goverment and the FED find it nessicarry to devalue the dollar to prop up assett prices in our subprime economy.

At 2/01/2008 9:32 AM, Anonymous Anonymous said...

I just spoke to a woman who has a prime, option arm.

She is refinancing to a 15 year fixed.

I suspect she is not alone.

At 2/01/2008 10:35 AM, Anonymous Anonymous said...

Please post back when she qualifies and the property registry office registers the re-fi. Otherwise, she is just another jingle mailer.

The bulk of option ARMERS don't qualify due to lack of income and lack of equity. Otherwise, she would have qualified in the first instance. WE ARE ALL SUBPRIME NOW.

At 2/01/2008 11:05 AM, Anonymous Anonymous said...

Prime Mortgages Surprising Victims - BusinessWeek

"Subprime defaults have been a big issue, but foreclosures on home-buyers with good credit are growing in a scary way in many states"

A 902% increase in prime mortgage defaults in some states might get someones attention.

At 2/01/2008 11:23 AM, Anonymous Anonymous said...

Housing Meltdown?
Could home prices plunge 25% or more before the market finally hits bottom...

At 2/01/2008 12:09 PM, Anonymous Anonymous said...

Commercial real estate prices may fall 21 percent to 26 percent from current levels, resulting in writedowns for banks of about $20 billion, Goldman Sachs said today in a report.

Home price declines will probably drive defaults in non- traditional loans such as Alt-As, which often include limited or no income documentation, resulting in $40 billion in markdowns ...


At 2/01/2008 1:26 PM, Anonymous Anonymous said...

The insanity of this fantasy economy reveals itself in the statistics reported.

Employers cut 17,000 jobs from their payrolls in January BUT the unemployment rate fell to 4.9% from 5% in December because the number of people in the labor force declined.

At 7/11/2008 1:44 AM, Anonymous Anonymous said...

Your blog gives facts and thanks for that anyway. Why is that loans are decreasing in number. Maybe borrowers didn't pay their credit and maybe the management has the problem.


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