Mortgage/foreclosure mess just getting started

NEW -> Contingent Buyer Assistance Program
southoctracker_IHB

southoctracker_IHB

New member
Some interesting quotes from a post at the LA Times real estate blog today:

"The current foreclosure wave is being fueled by loans made in 2005 and 2006; these new studies signal that 2007 loans were just as poorly underwritten -- perhaps worse -- and will keep the foreclosures coming for quite a while."

"Another aspect here is pretty troubling: when loans made in late 2006 or 2007 are already going bad, it's hard to blame the terms of the loan -- misleading teaser rates, adjusting interest rates, payment shocks, etc. -- these appear to be borrowers who couldn't afford the initial payments, let alone the resets."
 
It would be interesting to know the volume numbers. The subprime spigot was turned off early this year, whereas it was on full blast in 2006.
 
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That is the ABX for the first half of 2007 on the lowest grade of subprime loans. I don't think the 2006 index got that low. I have already started to see 2007 loans at the foreclosure auction. I can look at the 2007 MBS deals and see how bad they are doing but I can't compare the rate they defaulting compared to 2006. I'm sure though it will be ugly. Any particular lender requests?
 
graphrix - Yes, a few AAAs please. I know they are less dramatic, but I think they are a much better overall indicator of the trend in the credit market.
 
I will pick on Countrywide on deals that closed in 2/2007 and I will do subprime, ALT-A, option ARMS and AAA.

Subprime total delinquent 14.68% and 7.97% in foreclosure, BK or REO. Current pool balance $443.6mil. Yes it is getting worse because 3 months ago early 2006 vintages were this bad.

ALT-A total delinquent 3.39% and 1.05% in foreclosure, BK or REO. Current pool balance $921.9mil. I checked the prospectus and the average FICO score was 715 which is high for ALT-A. Also about 60% of this pool are loans from CA.

AAA total delinquent .88% and .18% in foreclosure or REO. Current pool balance $1.1bil but the original balance was $2.2bil. A 50% prepay rate is awful. It is no wonder the jumbo market tanked investors didn't even get a chance to make any money. About 40% of this pool are loans from CA and the average FICO is 744.

Option ARMs total delinquent 5.28% and 1.16% in foreclosure, BK or REO. Current pool balance $1.03bil. About 50% of the loans are in CA and the average FICO was about 710. This is scary because it proves our theory that people have loans where they cannot even make a payment that is less than the interest.
 
Graphrix sez, "Option ARMs total delinquent 5.28% and 1.16% in foreclosure, BK or REO. Current pool balance $1.03bil. About 50% of the loans are in CA and the average FICO was about 710".

Geez, couldn't these people have gone jumbo fixed with that FICO ? The rates were still pretty low then.... I'm guessing most were flippers, figuring on a fast buck. SO sorry.
 
So am I reading this right that if we take option arms and subprime we are looking at 42% of loans being written? Unless I am missing another class of loan, thats not so good...
 
a good gredit score does not denote intelligence, it just means you haven't made a mistake yet. Well, thousands of prime borrowers got sucked up into the fake OC RE wealth phenomenon. I'm sure our buddy Slade Smiley was a prime borrower too, and so are all these flippers.
 
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