Jumbo loan puzzle

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Anonymous_IHB

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So, I was watching this video http://www.cnbc.com/id/15840232?video=1233249360&play=1 and there is a very strange chart.

The chart goes like this (it's for US jumbo prime mortgages):

Jumbo Prime Default Rates

2006 Vintage: 4.7 x Avg.

2007 Vintage: 12.1 x Avg.

2008 Vintage: 7.7 x Avg.

This really confuses me since the loan underwriting standards were supposed to have gone up in 2007, 2008. Anyone have an idea what's going on?
 
Anonymous said:
So, I was watching this video http://www.cnbc.com/id/15840232?video=1233249360&play=1 and there is a very strange chart.

The chart goes like this (it's for US jumbo prime mortgages):

Jumbo Prime Default Rates

2006 Vintage: 4.7 x Avg.

2007 Vintage: 12.1 x Avg.

2008 Vintage: 7.7 x Avg.

This really confuses me since the loan underwriting standards were supposed to have gone up in 2007, 2008. Anyone have an idea what's going on?
Click to expand...

Negative equity is the biggest determinate of default.
 
Anonymous said:
This really confuses me since the loan underwriting standards were supposed to have gone up in 2007, 2008
Click to expand...
These are Prime loans; underwriting would not have to play many games to approve these. Something else is going on.
 
2007 Vintage were still "top shelf Kool-Aid". You could still get 95% financing, stated stated, and IO loans. Those loans were made when the roller coaster was beginning to downward velocity from the 2006 top. I call these buyers "the unawares".

2008 Vintage are economic distress, walk aways just becoming vogue, and over-buyers who thought when they bought, they were smart enough to time the bottom - AKA those to still listened to Steven Thomas et al about the certain bottom of the market "just around the corner".

My .02c

Soylent Green Is People.
 
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