So maybe the Sub-prime mortgage crisis isn?t that big of a deal after all

[ProfJohn]

Originally posted by: dmcowen674

Originally posted by: ProfJohn
So maybe all the doom and gloom about the sub-prime mortgage crisis doesn?t reflect reality and is just another example of bad news getting ratings and selling news papers.

Of all the mortgages in the country only 14% are sub-prime and of those only 13% are late on payments.

Also there are 254,000 mortgages in foreclosure right now, this compares to 219,000 at this point last year.

Read the article and draw your own conclusions.

The only conclusion here is you are a sad man.

If you loved your country you would expect a whole lot better for it.

Elite must have an alternative meaning in Anand world.

 

[jman19]

Originally posted by: ProfJohn

Originally posted by: dmcowen674

Originally posted by: ProfJohn
So maybe all the doom and gloom about the sub-prime mortgage crisis doesn?t reflect reality and is just another example of bad news getting ratings and selling news papers.

Of all the mortgages in the country only 14% are sub-prime and of those only 13% are late on payments.

Also there are 254,000 mortgages in foreclosure right now, this compares to 219,000 at this point last year.

Read the article and draw your own conclusions.

The only conclusion here is you are a sad man.

If you loved your country you would expect a whole lot better for it.

Elite must have an alternative meaning in Anand world.

As usual, cherry picking responses rather than making an attempt to reply to any of the issues brought up.

Let the disinformation continue to flow, PJ.

 

[Mursilis]

Originally posted by: LegendKiller
I really get a kick out of these people thinking this is an isolated thing. Subprime purchased houses support Alt-A purchased houses which support Conforming purchased houses.

If you remove one link in this chain the entire thing falls appart. In 2006 Subprime and Alt-A combined totalled 40% of all originated mortgages. If 20% of those default, which is a fair guesstimate, then 8% of all homes purchased in 2006 go back on the market. As a result, the prices for everything else drops, resulting in further people walking away from their homes.

This is the key difference people forget about. You cannot consider subprime in a vacuum. As you see from mshan above, the next highest borrower, whether that be Alt-A or conforming/prime feels the pressure from below. The next riskiest borrower *will* feel pressure.

What happens if an additional 10-15% of prime borrowers defaults? That tags on a blended default rate of what? 12%? Thats a lot of money gone.

Ben Stein, the commedian/actor is now some sort of economic guru to be parroted everywhere?

Naturally, people are screaming "media media" as HSBC takes a 9 billion dollar hit and other companies take multi-billion dollar hits. This is not a media caused problem.

I've certainly observed the market effect locally. In the DC metro area, once one of the hottest markets nationally, prices have definitely declined, and builders, who at one time couldn't build new subdivisions fast enough, are having to throw in lavish upgrades and other inventives to move inventory. Media creation or not, the market effect is definitely real around here.

 

[rchiu]

Originally posted by: ProfJohn
So maybe all the doom and gloom about the sub-prime mortgage crisis doesn?t reflect reality and is just another example of bad news getting ratings and selling news papers.

Of all the mortgages in the country only 14% are sub-prime and of those only 13% are late on payments.

Also there are 254,000 mortgages in foreclosure right now, this compares to 219,000 at this point last year.
Read the article and draw your own conclusions.
Link with nice chart

Ben Stein said it well this past Saturday on Fox?s Cavuto on Business: The sub-prime mortgage problem is grossly overstated; the sector is just too small.

Smart guy, Ben. Ferris Bueller never should have skipped school that day ? he would have learned economics from a master. (Stein, for those who might have missed it, played Bueller?s (Matthew Broderick?s) high-school teacher in the pop hit, Ferris Bueller?s Day Off.)

But let?s switch movie metaphors for a moment. In Rain Man, autistic savant Raymond Babbitt (Dustin Hoffman) is asked two economics questions by Charlie, his money-loving younger brother (Tom Cruise).

Charlie: Raymond, how much does a candy bar cost?

Raymond: About a hundred dollars.

Charlie: Raymond, how much does an automobile cost?

Raymond: About a hundred dollars.

The questions are designed to reveal a systematic flaw in the way Raymond looks at the world. For all his skill at counting the minutia in life (like toothpicks), he just doesn?t understand the issue of scale. He doesn?t have an inherent sense of how big things are.

I?ve thought a lot about Rain Man over the past few months as I?ve been following the press coverage of the sub-prime mortgage crisis. The story?s been on the front page of the Wall Street Journal nearly every day. Pretty much every show on CNBC ? except Kudlow & Co. and one or two others ? has been obsessed with the topic. Yet no one seems to be asking the Rain Man question: ?How big is the sub-prime mortgage market??

And the answer, as Ben Stein makes clear, is not very big at all.

Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are sub-prime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.

So, all in all, when you work through the details and get down to the number that really matters, only about 0.6 percent of U.S. mortgages are currently in foreclosure. That?s up a hair from roughly 0.5 percent last year. That?s it.

Actually, that?s not it. Things are actually better than the numbers suggest, since sub-prime-mortgage homes are less expensive than prime-mortgage homes. This makes sense. Wealthier people, generally, can afford costlier homes than less-wealthy people. The recent sub-prime surge brought large numbers of moderate-income families into the home-ownership market, and their houses are less expensive than most. Therefore, the dollar impact of the sub-prime default is smaller than if it were a prime default.

With approximately 254,000 mortgages in foreclosure at the moment ? up from roughly 219,000 last year ? the sub-prime meltdown has given us an increase of 35,000 mortgage foreclosures over the last quarter. Since the average sub-prime mortgage clocks in at almost exactly $200,000, we?re looking at an approximate $7 billion increase in foreclosed value in the first quarter of this year.

Raymond, how big is household net worth in the U.S.? About a hundred dollars?

Actually, it?s a lot bigger than that ? about $53 trillion. In other words, the recent increase in sub-prime foreclosures amounts to 0.01 percent of net U.S. household wealth.

That?s toothpicks, Raymond.

An article with both Rainman and Ferris Bueller references? how cool is that?

Do you rather listen to some guy who played Ferris Bueller?s teacher or Fed Chairman.

Quote:

Bernanke: Subprime hit could top $100B
Housing slump could hurt consumer spending; Fed is moving to protect consumers from predatory mortgage lending.

 

[LegendKiller]

Originally posted by: Mursilis

Originally posted by: LegendKiller
I really get a kick out of these people thinking this is an isolated thing. Subprime purchased houses support Alt-A purchased houses which support Conforming purchased houses.

If you remove one link in this chain the entire thing falls appart. In 2006 Subprime and Alt-A combined totalled 40% of all originated mortgages. If 20% of those default, which is a fair guesstimate, then 8% of all homes purchased in 2006 go back on the market. As a result, the prices for everything else drops, resulting in further people walking away from their homes.

This is the key difference people forget about. You cannot consider subprime in a vacuum. As you see from mshan above, the next highest borrower, whether that be Alt-A or conforming/prime feels the pressure from below. The next riskiest borrower *will* feel pressure.

What happens if an additional 10-15% of prime borrowers defaults? That tags on a blended default rate of what? 12%? Thats a lot of money gone.

Ben Stein, the commedian/actor is now some sort of economic guru to be parroted everywhere?

Naturally, people are screaming "media media" as HSBC takes a 9 billion dollar hit and other companies take multi-billion dollar hits. This is not a media caused problem.

I've certainly observed the market effect locally. In the DC metro area, once one of the hottest markets nationally, prices have definitely declined, and builders, who at one time couldn't build new subdivisions fast enough, are having to throw in lavish upgrades and other inventives to move inventory. Media creation or not, the market effect is definitely real around here.

I just came from the Reston area and I certainly agree.

What people also don't figure into the equation is that the market value for those upgraded homes will push down the market value for non-upgraded homes.

This is all about relative value.

If you find a house that's a 100 and 100 for both features and price and another that is a 95 on features but recently declined to 80 on price, you're going to go with the better value. As the marginal cost of getting the marginal feature increases, the utility of that feature decreases.

Natural economic forces will also push the 100/100 house down as more people go to the 95/80 houses. An equalibrium will result whereby the utility equals the price. However, that will not occur until such a time as the house that is marginally more valuable stops declining and each house above it has been reduced, in line, with its own value.

This repricing up the chain will also trigger more people to go into an underwater status on their loans, or force them to sell to lock in any gains possible, or just break even. Naturally this leads to further price depreciation.

This isn't just a subprime issue. It goes all of the way to the top. You cannot remove the bottom of the ship and have the ship stay afloat, the whole thing sinks.

 

[LegendKiller]

Originally posted by: rchiu

Originally posted by: ProfJohn
So maybe all the doom and gloom about the sub-prime mortgage crisis doesn?t reflect reality and is just another example of bad news getting ratings and selling news papers.

Of all the mortgages in the country only 14% are sub-prime and of those only 13% are late on payments.

Also there are 254,000 mortgages in foreclosure right now, this compares to 219,000 at this point last year.
Read the article and draw your own conclusions.
Link with nice chart

Ben Stein said it well this past Saturday on Fox?s Cavuto on Business: The sub-prime mortgage problem is grossly overstated; the sector is just too small.

Smart guy, Ben. Ferris Bueller never should have skipped school that day ? he would have learned economics from a master. (Stein, for those who might have missed it, played Bueller?s (Matthew Broderick?s) high-school teacher in the pop hit, Ferris Bueller?s Day Off.)

But let?s switch movie metaphors for a moment. In Rain Man, autistic savant Raymond Babbitt (Dustin Hoffman) is asked two economics questions by Charlie, his money-loving younger brother (Tom Cruise).

Charlie: Raymond, how much does a candy bar cost?

Raymond: About a hundred dollars.

Charlie: Raymond, how much does an automobile cost?

Raymond: About a hundred dollars.

The questions are designed to reveal a systematic flaw in the way Raymond looks at the world. For all his skill at counting the minutia in life (like toothpicks), he just doesn?t understand the issue of scale. He doesn?t have an inherent sense of how big things are.

I?ve thought a lot about Rain Man over the past few months as I?ve been following the press coverage of the sub-prime mortgage crisis. The story?s been on the front page of the Wall Street Journal nearly every day. Pretty much every show on CNBC ? except Kudlow & Co. and one or two others ? has been obsessed with the topic. Yet no one seems to be asking the Rain Man question: ?How big is the sub-prime mortgage market??

And the answer, as Ben Stein makes clear, is not very big at all.

Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are sub-prime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.

So, all in all, when you work through the details and get down to the number that really matters, only about 0.6 percent of U.S. mortgages are currently in foreclosure. That?s up a hair from roughly 0.5 percent last year. That?s it.

Actually, that?s not it. Things are actually better than the numbers suggest, since sub-prime-mortgage homes are less expensive than prime-mortgage homes. This makes sense. Wealthier people, generally, can afford costlier homes than less-wealthy people. The recent sub-prime surge brought large numbers of moderate-income families into the home-ownership market, and their houses are less expensive than most. Therefore, the dollar impact of the sub-prime default is smaller than if it were a prime default.

With approximately 254,000 mortgages in foreclosure at the moment ? up from roughly 219,000 last year ? the sub-prime meltdown has given us an increase of 35,000 mortgage foreclosures over the last quarter. Since the average sub-prime mortgage clocks in at almost exactly $200,000, we?re looking at an approximate $7 billion increase in foreclosed value in the first quarter of this year.

Raymond, how big is household net worth in the U.S.? About a hundred dollars?

Actually, it?s a lot bigger than that ? about $53 trillion. In other words, the recent increase in sub-prime foreclosures amounts to 0.01 percent of net U.S. household wealth.

That?s toothpicks, Raymond.

An article with both Rainman and Ferris Bueller references? how cool is that?

Do you rather listen to some guy who played Ferris Bueller?s teacher or Fed Chairman.

Quote:

Bernanke: Subprime hit could top $100B
Housing slump could hurt consumer spending; Fed is moving to protect consumers from predatory mortgage lending.

lol. I don't claim to be as smart as Ben Stein, but last time I checked he doesn't work in the financial markets, he doesn't have a primary career there, he works as an actor/comedian/gameshow host, he doesn't have any finance certficiations and his only claim to fame is being a marginal economist. Additionally, his numbers are wrong and/or outdated and flat out misconstrued.

Naturally, uneducated non-professor john types are gullible and would rather listen to the 1 person they agree with than the 10 people they don't.

 

[Phokus]

ProfJohn shouldn't be allowed to post these weak articles that are easily debunked and just run away. I'd say more than half of his threads are like this.

 

[ProfJohn]

What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

 

[mshan]

I believe that Ben Stein and other souless capitalists like Larry Kudlow who pray at the alter of the corporation were saying that subprime is "contained" because the contribution of subprime consumers to overall GDP was low and their decreased contribution because of foreclosures would only be a drag on overall GDP (I remember seeing some report on tv about someone from Tiffany's (I think it was Tiffany's, but it could have been some other high end retailer in NY) saying that there was a wall of money coming at them; this was earlier this year).

You have to separate this out from the economic fallout of the subprime crisis from the perspective of Wall Street (whose highly levered bets may now be worthless - Cramer thinks these losses could be around $500 billion) and whether the current re-pricing of risk in the credit markets squeezes off growth and drags the whole economy into a recession.

 

[jman19]

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

I think people are sick of you cherry picking stories to post and replys to respond to all day long. You spread disinformation with no regard for anything other than your own political agenda.

 

[Phokus]

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

 

[Mursilis]

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

If you don't like a thread, ignore it or rebut it. PJ is just doing what Conjur used to always do from the other side of the political spectrum. And it's not like this place has real high standards - if Dave is still welcome, practically anyone is.

 

[LegendKiller]

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

He won't bother because he knows next to nothing about the subject. That's not an attack, just an observation according to what I have seen in his posts. All he can do is trumpet his heroes around with little to know original thought or analysis. Naturally he'll claim that he was just posting a message.

Anybody who has thought about this to a large extent can see that Ben Stein's logic sucks ass. However, the unthinking people refuse to think about it because...it hurts their head or something.

People like John won't ever learn because they're lazy, that's why he won't respond to me. if he does, it'll be another canned response, one liner, or somebody else's analysis. He won't ask a question to be educated but will forward another shill's ideas. Why? He's too lazy to think.

 

[ProfJohn]

Originally posted by: Phokus
ProfJohn shouldn't be allowed to post these weak articles that are easily debunked and just run away. I'd say more than half of his threads are like this.

The idea of a forum is to discuss things.

I saw something interesting and wanted to get the comments of others on the topic so I posted it. If you don?t want to discuss the issue at hand there are plenty of other threads for you to comment on.

 

[Vic]

http://money.cnn.com/2007/08/0...postversion=2007080911

Mortgage defaults growing
World's largest insurer, in a presentation on subprime exposure, says total delinquencies in its real estate portfolio at 2.5 percent.
August 9 2007: 11:20 AM EDT

NEW YORK (CNNMoney.com) -- Another rough day on the subprime front. AIG, the world's largest insurer and one of the biggest mortgage lenders, said residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime.

France's biggest listed bank, BNP Paribas, froze $2.2 billion worth of funds, citing subprime woes. And the European Central Bank felt it had to inject $130.5 billion into euro-zone money markets to help calm jittery markets.

AIG (Charts, Fortune 500) said total delinquencies in its $25.9 billion mortgage insurance portfolio were 2.5 percent.

It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.

While maintaining that it is "comfortable" with its mortgage exposure, AIG gave a gloomy assessment of the market in a presentation to investors and analysts.

It said delinquency rates for first mortgages had risen to 3.98 percent in June from 3.56 in April and a low of 3.08 in July 2005. First mortgages represent 90 percent of AIG's domestic mortgage business.

AIG divided its mortgage portfolio into three categories: subprime, for borrowers with credit scores below 620; "non-prime," for borrowers with credit scores between 620 and 659; and prime, for borrowers with credit ratings above 660.

As of June 30, AIG's finance arm, which originates first and second mortgages, recorded delinquencies of 3.68 percent in subprime, 2.13 percent in non-prime, and 0.81 percent in prime.

More than 2 million hybrid adjustable rate mortgages (ARMs) come up for reset this fall - peaking in October with more than $50 billion due.

Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low "teaser" rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.

Foreclosures could explode, which would hurt everyone on the food chain: Borrowers lose their homes; lenders lose their payments; local governments lose tax base; and neighborhoods lose resiliency.

The already poor performance of many mortgage loans will worsen substantially through the rest of the year, according to an analysis in late July by Moody's Economy.com.

The company predicts that 2.5 million first mortgages will default this year, with little chance for improvement soon - Economy.com expects delinquencies to peak in the summer of 2008 at 3.6 percent of all outstanding mortgage debt, up from 2.9 percent during the first three months of 2007.

The worst-hit loan category will be subprime adjustable-rate mortgages (ARMs). Economy.com expects foreclosures for those loans to hit 10 percent of that group by mid-2008. The foreclosure rate for that group is currently 4 percent and was as low as 2.5 percent in 2005.

Subprime ARMs issued during the last three months of 2006 could fare worst of all, with a projected foreclosure rate of just under 20 percent during the fall of 2011. That would mean a full one in five owners still paying off subprime ARMs from late 2006 - about 12,000 in all - would lose their homes. Many others from that group would have already lost their homes to foreclosure in the previous years.

One-time, high-flying markets will suffer the most. California's Central Valley is particularly vulnerable, according to the study. Other hard-pressed areas cluster in Florida, Nevada, New York, Arizona and the District of Columbia.

The delinquency increase will be sparked by two main factors: Falling home prices and rising interest rates on adjustable mortgages.

Bolded the pertinent parts. Except for the brief drop during the boom, these delinquency, default, and foreclosure rates are entirely within historical norms.
This is not a partisan argument, and anyone trying to make it as such is merely acting as tool for the monied interests on Wall Street trying to dump the housing market right now, for their own profit and to the detriment of the American people. Stop being a sheep.

 

[Vic]

Originally posted by: LegendKiller

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

He won't bother because he knows next to nothing about the subject. That's not an attack, just an observation according to what I have seen in his posts. All he can do is trumpet his heroes around with little to know original thought or analysis. Naturally he'll claim that he was just posting a message.

Anybody who has thought about this to a large extent can see that Ben Stein's logic sucks ass. However, the unthinking people refuse to think about it because...it hurts their head or something.

People like John won't ever learn because they're lazy, that's why he won't respond to me. He's too lazy to think.

Heh. I'll keep this post in mind the next time you start whining about "personal attacks."

Next, I'll post all my favorite snippets of your extremely elitist remarks in the recent OT thread about "no weeping" for the poor foreclosed-upon and how your wealthy self intends to snap up their homes for pennies on the dollar.
So don't pretend you're trying to help people when you've made it more than clear that your motives are otherwise.

 

[ProfJohn]

Originally posted by: LegendKiller

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

He won't bother because he knows next to nothing about the subject. That's not an attack, just an observation according to what I have seen in his posts. All he can do is trumpet his heroes around with little to know original thought or analysis. Naturally he'll claim that he was just posting a message.

Anybody who has thought about this to a large extent can see that Ben Stein's logic sucks ass. However, the unthinking people refuse to think about it because...it hurts their head or something.

People like John won't ever learn because they're lazy, that's why he won't respond to me. He's too lazy to think.

Umm one of the reasons I posted this was to see what people like you think on this subject.

If you read my posts on this subject I do not claim to be an authority nor do I claim that what I say has special meaning.

Why not focus on the details of the story instead of attacking me?

 

[mshan]

Foreclosures will drive down home prices of surrounding good credit homes and will just add to the current massive oversupply of homes in the U. S.

Got to wonder how much recent growth in the economy by "prime" homeowners spending was due to them feeing rich because their houses have appreciated so much in recent years (home equity loans?)

 

[Vic]

Originally posted by: mshan
I believe that Ben Stein and other souless capitalists like Larry Kudlow who pray at the alter of the corporation were saying that subprime is "contained" because the contribution of subprime consumers to overall GDP was low and their decreased contribution because of foreclosures would only be a drag on overall GDP (I remember seeing some report on tv about someone from Tiffany's (I think it was Tiffany's, but it could have been some other high end retailer in NY) saying that there was a wall of money coming at them; this was earlier this year).

You have to separate this out from the economic fallout of the subprime crisis from the perspective of Wall Street (whose highly levered bets may now be worthless - Cramer thinks these losses could be around $500 billion) and whether the current re-pricing of risk in the credit markets squeezes off growth and drags the whole economy into a recession.

The "soulless" ones are the communists who are ignorantly deluded into believing that corporatism is capitalism and that every person should be ruled by some authoritarian control in all their personal dealings.

Here's a tip, pal. There is no God, and you can't turn any man or group of men into a substitute for a God. No one's running the show. Sorry if that scares the sh!t out of you.

 

[Vic]

Originally posted by: mshan
Foreclosures will drive down home prices of surrounding good credit homes and will just add to the current massive oversupply of homes in the U. S.

Got to wonder how much recent growth in the economy by "prime" homeowners spending was due to them feeing rich because their houses have appreciated so much in recent years (home equity loans?)

What's a "good credit" home?

Considering that the subprime boom had a major influence in increasing home values in recent years (by adding purchase money to the housing market that otherwise would not have been available), saying that it will "drive down" values now that the money is being retracted is kinda assinine, wouldn't you say?
Why one might almost compare it to screaming panic about foreclosure rates after they return to historic norms coming off historic lows.

Ah, the "United States of Amnesia." Gotta love it. Hysteria is so easy to generate in the memory-impaired.

 

[ProfJohn]

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

What is partisan about the mortgage market?

Are there Democrat mortgages and Republican mortgages?

Point out ONE thing in my OP that is partisan please.

 

[mshan]

I believe in free markets and also think the current correction (and yes, I am guessing that it is still just a correction) is actually quite healthy for the economy (in terms of unwinding what has been a ticking time bomb for many years).

I called those commentators souless because their comments are always from the perspective of a corporation, never of that of an individual.

Until recently, everyone in the subprime food chain (except for the actually person borrowing money to buy a home) made a lot of money selling this toxic waste. Sadly, these end users may have such damaged credit after foreclosure that they may never be able to get a mortgage again.

 

[LegendKiller]

Originally posted by: Vic
http://money.cnn.com/2007/08/0...postversion=2007080911

Mortgage defaults growing
World's largest insurer, in a presentation on subprime exposure, says total delinquencies in its real estate portfolio at 2.5 percent.
August 9 2007: 11:20 AM EDT

NEW YORK (CNNMoney.com) -- Another rough day on the subprime front. AIG, the world's largest insurer and one of the biggest mortgage lenders, said residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime.

France's biggest listed bank, BNP Paribas, froze $2.2 billion worth of funds, citing subprime woes. And the European Central Bank felt it had to inject $130.5 billion into euro-zone money markets to help calm jittery markets.

AIG (Charts, Fortune 500) said total delinquencies in its $25.9 billion mortgage insurance portfolio were 2.5 percent.

It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.

While maintaining that it is "comfortable" with its mortgage exposure, AIG gave a gloomy assessment of the market in a presentation to investors and analysts.

It said delinquency rates for first mortgages had risen to 3.98 percent in June from 3.56 in April and a low of 3.08 in July 2005. First mortgages represent 90 percent of AIG's domestic mortgage business.

AIG divided its mortgage portfolio into three categories: subprime, for borrowers with credit scores below 620; "non-prime," for borrowers with credit scores between 620 and 659; and prime, for borrowers with credit ratings above 660.

As of June 30, AIG's finance arm, which originates first and second mortgages, recorded delinquencies of 3.68 percent in subprime, 2.13 percent in non-prime, and 0.81 percent in prime.

More than 2 million hybrid adjustable rate mortgages (ARMs) come up for reset this fall - peaking in October with more than $50 billion due.

Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low "teaser" rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.

Foreclosures could explode, which would hurt everyone on the food chain: Borrowers lose their homes; lenders lose their payments; local governments lose tax base; and neighborhoods lose resiliency.

The already poor performance of many mortgage loans will worsen substantially through the rest of the year, according to an analysis in late July by Moody's Economy.com.

The company predicts that 2.5 million first mortgages will default this year, with little chance for improvement soon - Economy.com expects delinquencies to peak in the summer of 2008 at 3.6 percent of all outstanding mortgage debt, up from 2.9 percent during the first three months of 2007.

The worst-hit loan category will be subprime adjustable-rate mortgages (ARMs). Economy.com expects foreclosures for those loans to hit 10 percent of that group by mid-2008. The foreclosure rate for that group is currently 4 percent and was as low as 2.5 percent in 2005.

Subprime ARMs issued during the last three months of 2006 could fare worst of all, with a projected foreclosure rate of just under 20 percent during the fall of 2011. That would mean a full one in five owners still paying off subprime ARMs from late 2006 - about 12,000 in all - would lose their homes. Many others from that group would have already lost their homes to foreclosure in the previous years.

One-time, high-flying markets will suffer the most. California's Central Valley is particularly vulnerable, according to the study. Other hard-pressed areas cluster in Florida, Nevada, New York, Arizona and the District of Columbia.

The delinquency increase will be sparked by two main factors: Falling home prices and rising interest rates on adjustable mortgages.

Bolded the pertinent parts. Except for the brief drop during the boom, these delinquency, default, and foreclosure rates are entirely within historical norms.
This is not a partisan argument, and anyone trying to make it as such is merely acting as tool for the monied interests on Wall Street trying to dump the housing market right now, for their own profit and to the detriment of the American people. Stop being a sheep.

Historical norms compared to when? Compared to other sections of the economy during benign credit times, lower interest rates, lower inflation, and good economy? Compared to times when credit was so easy to get, prices of houses were declining, and when the pool of subprime borrowers is more than 2x the norm and when Alt-A were of much lower credit than any point in history? Compared to when now, according to the Federal Reserve 18% of income goes to debt service compared to only 13% in 1981? That percentage increased quickly in the last 2 years. Compared to when the average US Home Equity Extraction, according to the Fed, was almost 300bn in 2006, 600bn in 2005, 450bn in 2004, 350bn in 2003, 250bn in 2002, 200bn in 2001, 150bn in 2000, when it was less than 100bn for the peruiods of 1999 to 1991?

When home equity has steadily dropped, the savings rate has dropped, DTI has skyrocketed, and credit lines outstanding have increase?

Yeah, none of those other factors matter going *FORWARD*.

You call other people sheep for not listening to your soothing tones. Please, you consider one factor in the equation while skipping the other 20.

 

[mshan]

Interesting how people on CNBC on now talking about how people may want Fannie Mae and Freddie Mac to essentially bail out the subprime mortgage market.

According to some commentary I heard on The Mortgage Insider podcast ( http://www.themortgageinsider.net ), reason restraints were placed on Fannie Mae and Freddie Mac were supposed because of their recent accounting scandal, but that the accounting scandal was their attempt to hide massive losses gambling in the derivatives market! (same thing happening now, except on a much more massive and global scale?)

I am no supporter of Bush, but I am with him here in that Fannie and Freddie should not be bailing out the subprime mortgage market because unfortunatley it may be difficult to separate those who would never pay back the loans anyways (never should have been allowed to borrow) vs. those that were duped into a loan they couldn't afford or just put in a subprime loan even though they qualified for a cheaper higher quality loan.

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Phokus

Originally posted by: ProfJohn
What is with the constant barrage of personal attacks?

I am just repeating what is in the story.

If you have a problem with the story then comment on it.

Personal attack? It's an observation. A highly partisan publication quoting a highly partisan individual making a highly partisan argument which you use as your source, you should be prepared to defend it if you post it. I would think you should at least respond to LegendKiller, who knows quite a bit about this issue seeing as he's in the investment banking business.

He won't bother because he knows next to nothing about the subject. That's not an attack, just an observation according to what I have seen in his posts. All he can do is trumpet his heroes around with little to know original thought or analysis. Naturally he'll claim that he was just posting a message.

Anybody who has thought about this to a large extent can see that Ben Stein's logic sucks ass. However, the unthinking people refuse to think about it because...it hurts their head or something.

People like John won't ever learn because they're lazy, that's why he won't respond to me. He's too lazy to think.

Heh. I'll keep this post in mind the next time you start whining about "personal attacks."

Next, I'll post all my favorite snippets of your extremely elitist remarks in the recent OT thread about "no weeping" for the poor foreclosed-upon and how your wealthy self intends to snap up their homes for pennies on the dollar.
So don't pretend you're trying to help people when you've made it more than clear that your motives are otherwise.

Look for one post in our conversation when I sit there whining about personal attacks. I think you are confused as to the times when I point out your hypocracy about personal attacks and merely laugh at you for it. I don't care if you attack me personally, have at it, just don't bitch when I return the favor.

It's not elitist to not give a crap about people who refuse to educate themselves and fall prey to their own greed and stupidity. I don't take advantage of it, but I don't feel sorry for them either. I know several massive morons who are in a mess now despite me telling them to be very very careful. In fact, one of my wife's college buddies is probably going to lose *two* houses and trash her credit score because she refused to listen to me. Personally, I couldn't be more satisfied that another dippy with tons of greed losses out beause she was too stupid to see past her nose. All she thought about was money money money, you can see that in every facet of her life, She wasn't rational, nor thinking, just blind money money money. Now she'll pay for it and I have not one iota of remorse.

I have no motives in this situation. I didn't participate in the boom but when the bust stops I'll probably buy a house anyway, it fits with my career and life goals, I am just pushing it off until prices become more reasonable. I like how you try to assign ulterior motives though, nice going!