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Mortgage Crisis Spreads Past Subprime Loans
At one point the article notes the rapid rise in delinquency and foreclosure rates among prime mortgages, noting that almost 4 percent of all prime loans were in one or the other category last September. It is worth noting that the delinquency and foreclosure rates are far higher among recently issued prime mortgages, with some series showing rates of close to 10 percent for mortgages issued in 2007. The overall rate is held down by the large number of old prime mortgages that have been largely paid off. In many ways, the recent prime loans are the better comparison with the subprime market, because there are relatively few old subprime loans in existence.
--Dean Baker
COMMENTS (8)
I only hope that some reasonable solution to the problem, such as some version of your rental plan, gets adopted. But I've seen no mention of it other than at CEPR, hence I imagine there is no chance this year.
And even if (I hope) a sensible majority wins in the Fall, by the time your plan could get enacted, it will probably be a moot point for most.
Posted by: Joe K | February 12, 2008 8:31 AM
Dean you wrote: In many ways, the recent loans are the better comparison with the subprime market, because they are relatively few old subprime loans in existence.
The recent loans are a better comparison, because they are likely to have been made with the bubble induced inflated housing prices, and as such have people owing more in the loan than the value of the house in a market with falling values. This is why someone may walk away from the loan.
You actually say this in a between the lines way when you write about loans that have largely have been paid off, which translates to, I have more equity than the balance of the loan to pay off.
Posted by: Josh | February 12, 2008 10:16 AM
Has the media in N. Virginia noticed that home sales in January were 38% lower than the Lowest January on record which was Jan99 (MRIS.com.)
The January sales were 245% lower than Jan 05 which had the highest sales since Jan 99 with 1318 homes sold.
Posted by: Steve | February 12, 2008 11:31 AM
I would really like to see Dean Baker take on the incredibly dismissive, shallow, arrogant piece by Eduardo Porter in the NYT on how awesome NAFTA is because it's finally getting rid of those inefficient campesino farmers in Mexico (and how nice it would be if some fairy Mexican government which has never existed would 'help them' some other way).
By the way, now that there's a new round of Mexican peasant farmers displaced from both their living and their land, let's all act really, really surprised when suddenly we get a new wave of peasant farmer immigrants to the U.S., because no one could have anticipated such a thing, right?
Posted by: El Cid | February 12, 2008 2:28 PM
Hey Dean? Why do you hate the Murkin economy? NOBODY could have EVER anticipated this. (N-CHEAT, for short).
Posted by: woody, tokin librul | February 12, 2008 3:04 PM
Dean,
Where can I get hold of data showing the delinquncy rates of 2007 vintage prime loans? I would dearly love to see this.
Posted by: Holden Lewis | February 13, 2008 7:28 AM
Did anyone hear Obama's speach at Madison last night?
In my opinion, if you want inspiration, you want Obama; if you want information, you want Hillary; and if you want insulation, you want McCain
Posted by: Neutral Observer | February 13, 2008 1:19 PM
What is amazing is I received an offer in the mail the other day- with you guessed it a teaser rate for refinancing 2.5% that jumps to 10+ after two years- I guess the industry has not learned its lesson yet.
Posted by: scott moore | February 19, 2008 11:38 AM