US mortgage crisis goes into meltdown

Andy Hunt · Post by **Andy Hunt** » 14 Mar 2007, 17:03

The stock market looks like it's been dragged through a hedge fund backwards.

ianryder · Post by **ianryder** » 14 Mar 2007, 17:05

Oh Andy, how do you do it?

Totally_Baffled · Post by **Totally_Baffled** » 14 Mar 2007, 22:52

Andy Hunt wrote:The stock market looks like it's been dragged through a hedge fund backwards.

ianryder · Post by **ianryder** » 16 Mar 2007, 10:17

If anyone's interested a seriously good overview of what's going on this is worth a look:
http://www.bloomberg.com/avp/avp.asxx?c ... iIsfZM.asf

Aurora · Post by **Aurora** » 16 Mar 2007, 10:26

ianryder wrote:If anyone's interested a seriously good overview of what's going on this is worth a look:
http://www.bloomberg.com/avp/avp.asxx?c ... iIsfZM.asf

Thanks for the Vid Ian. It's not looking good.

ianryder · Post by **ianryder** » 16 Mar 2007, 10:40

And another very interesting one...think this one think the dollar's time is up. Suggesting that all the petro-dollars will be moved elsewhere and everyone's watching to see when:
http://www.bloomberg.com/avp/avp.asxx?c ... UH9gMY.asf

Is the US going to be Zimbabwe? Similarities between their leaders at least...

Post by **mikepepler** » 28 Mar 2007, 10:22

Check out the "Mortgage Lender Implode-O-Meter"
http://ml-implode.com/

Andy Hunt · Post by **Andy Hunt** » 28 Mar 2007, 10:51

mikepepler wrote:Check out the "Mortgage Lender Implode-O-Meter"
http://ml-implode.com/

Blimey!

'Foreclosure-porn'.

Post by **kenneal - lagger** » 28 Mar 2007, 15:13

# HSBC Household Finance [HSBC's subprime erased at least half of '06 earnings]

So that's my my bank charges have gone up!!

Post by **mikepepler** » 14 Jun 2007, 15:30

More news from the the US

New foreclosures set record, delinquencies down

CHICAGO (MarketWatch) -- A record number of U.S. homeowners entered the foreclosure process during the first quarter, the Mortgage Bankers Association said Thursday, with 0.58% of all loans entering the process, up from 0.54% in the fourth quarter of 2006.
The rate of subprime, adjustable-rate loans going into foreclosure jumped to a record 3.23% from 2.7% in the fourth quarter.
The rate of foreclosure starts would have fallen if not for increases in California, Florida, Nevada and Arizona, said Doug Duncan, MBA's chief economist. Indications are that foreclosures in those four states are largely influenced by speculators walking away from properties now that home prices have begun to fall in some areas; many of those owners face resets in the ARMs they took out for the homes, he said.
The percentage of loans in the foreclosure process was 1.28%, according to the group, up from 1.19% in the fourth quarter and up from 0.98% a year ago.
The delinquency rate, however, decreased during the quarter, standing at 4.84%, down from 4.95% in the fourth quarter and up from 4.41% a year ago. Loans are considered delinquent if they are more than 90 days past due.

Post by **mikepepler** » 14 Jun 2007, 15:33

Also, mortgage rates rising: (my emphasis in quote below)

Freddie Mac: 30-yr mortgage average up sharply to 6.74%

The benchmark 30-year fixed rate mortgage average rose sharply in the week ending Thursday, to 6.74% from 6.53% last week, according to Freddie Mac. The mortgage agency said its weekly survey showed the 15-year loan also spiked, to 6.43% from 6.22%. The 1-year Treasury-indexed adjustable rate increased to 5.75% from 5.65%, while the 5-year hybrid ARM averaged 6.37%, up from 6.24% last week. "Mortgage rates moved sharply upward this week, with rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the largest upward movement in over three years," said Frank Nothaft, Freddie Mac's chief economist, in a statement. "These moves parallel rising yields on Treasury securities, as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut. Higher mortgage rates may weigh on the housing market's gradual recovery. While demand appears to have stabilized, inventories of new homes remain high, putting downward pressure on construction and home prices."

Post by **mikepepler** » 14 Jun 2007, 19:27

and it's no longer just a subprime market:

Adjustable-rate mortgages going sour
Commentary: Foreclosure rates have doubled even for prime borrowers

WASHINGTON (MarketWatch) -- It's not just a subprime problem. It's an adjustable-rate problem.

The mortgage bankers came out with their latest survey on mortgage delinquencies and foreclosures on Thursday, showing a small rise in the percentage of homeowners who are in the process of losing their homes because they aren't paying the mortgage. At the end of the quarter, 1.28% of all loans were in the foreclosure process, up from 1.19% in the fourth quarter.

For those who have fixed-rate loans, or who passed the strict criteria to get a loan from the FHA or VA, foreclosure and delinquency rates actually fell. But those who took out adjustable-rate loans fell further behind.
Foreclosure rates for adjustable-rate mortgages, or ARMs, have doubled over the past two years. This is not just the subprime borrowers, those with less than stellar credit. Even prime borrowers who opted for ARMs are in trouble.

The foreclosure rate for subprime ARMs has gone from 5.1% to 10.1% in less than two years. The delinquency rate has soared from 10% to 15.75%.

For prime ARM borrowers, the foreclosure rate has doubled from 0.8% to 1.6% in just one year. The delinquency rate for prime ARMs jumped from 1.5% a year ago to 2.4% this year.

Prime ARMs include so-called Alt-A or toxic loans, which exploded in popularity in the past few years because they offer teaser rates, lax lending standards and the temporary option to pay less than required to pay down the loan.

The window is closing for ARM borrowers to refinance into fixed-rate loans. Mortgage rates have soared by 58 basis points since the end of the quarter to 6.74%. In the meantime, housing prices are flat or falling in the regions with the largest foreclosure rates.

Totally_Baffled · Post by **Totally_Baffled** » 14 Jun 2007, 19:53

I guess any loan with any sort of discount which is now coming to the end of the discount period is going to put people in the shit.

Imagine taking a mortgage out in the US when rates were 3%, discounted to 1%- 2% for 2 - 3 years, at the maximum amount for your income.

You come to the end of the disconut period and then have it reset to 6.5%!

You would be totally stuffed....

Lets do the math on a typical $200,000 mortgage:

Interest only

Discount period
1% interest = $167 per month vs say 3% normal rate of $500 per month

End of discount period and rate resets to:

6.5% interest = $1083 per month!!!

Repayment

Discount period
1% interest rate + contribution to principle = $646 compared to $850 at 3%

End of discount period and rate resets to:

6.5% + contribution to principle = $1276!!!

You can see the attraction of interest only from these calculations!

Also you can see the MASSIVE jump in repayments from discount period to the full rate!!

The jump is far more damaging under interest only - payments only double under the repayment scheme , but its over 6 times for the interest only!

skeptik · Post by **skeptik** » 14 Jun 2007, 21:54

Totally_Baffled wrote:I guess any loan with any sort of discount which is now coming to the end of the discount period is going to put people in the shit.

For what its worth, I read somewhere (sorry cant remember where) that this 'resetting' is going to kick in bigtime in the the USA this November.

oilslick · Post by **oilslick** » 14 Jun 2007, 22:28

skeptik wrote:For what its worth, I read somewhere (sorry cant remember where) that this 'resetting' is going to kick in bigtime in the the USA this November.

How about this:

Edit: image doesn't seem to want to work so here's a normal link:
http://www.californiahousingforecast.co ... 1689903687 which is on this page, http://www.californiahousingforecast.com/

The pain is only just starting