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Log in'Contained' subprime crisis breaking out
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'Contained' subprime crisis breaking out
by Outspoken on Sat Sep 06, 2008 6:38 am
'Contained' subprime crisis breaking out
The Associated Press
WASHINGTON (AP) -- The source of trouble in the mortgage market has shifted from subprime loans made to borrowers with bad credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.
The Mortgage Bankers Association said Friday that more than 4 million American homeowners with a mortgage -- a record 9 percent -- were either behind on their payments or in foreclosure at the end of June.
"The problem that policymakers and Wall Street once assured us was 'contained' to subprime mortgages has proven to be anything but," Mike Larson, a real estate analyst with Weiss Research, said in a research note.
As the economy falters and home prices keep falling, concern is building about a second wave of mortgage defaults flooding the market through 2010.
On Friday, the Labor Department said the nation's unemployment rate shot up to a five-year high of 6.1 percent in August.
A drop in income -- whether through a lost job, divorce, death of a spouse, or health problems -- is the No. 1 reason people fall behind on their mortgages and lose their homes.
But mortgage defaults and foreclosures in many areas, especially California and Florida, can also be blamed on egregious lending practices and rampant speculation by homebuilders and small investors alike.
"We are unlikely to see a national turnaround until we see a turnaround in the two largest states" with the most outstanding home loans, said Jay Brinkmann, the Mortgage Bankers Association's chief economist.
http://morningsentinel.mainetoday.com/news/local/5383089.html
The Associated Press
WASHINGTON (AP) -- The source of trouble in the mortgage market has shifted from subprime loans made to borrowers with bad credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.
The Mortgage Bankers Association said Friday that more than 4 million American homeowners with a mortgage -- a record 9 percent -- were either behind on their payments or in foreclosure at the end of June.
"The problem that policymakers and Wall Street once assured us was 'contained' to subprime mortgages has proven to be anything but," Mike Larson, a real estate analyst with Weiss Research, said in a research note.
As the economy falters and home prices keep falling, concern is building about a second wave of mortgage defaults flooding the market through 2010.
On Friday, the Labor Department said the nation's unemployment rate shot up to a five-year high of 6.1 percent in August.
A drop in income -- whether through a lost job, divorce, death of a spouse, or health problems -- is the No. 1 reason people fall behind on their mortgages and lose their homes.
But mortgage defaults and foreclosures in many areas, especially California and Florida, can also be blamed on egregious lending practices and rampant speculation by homebuilders and small investors alike.
"We are unlikely to see a national turnaround until we see a turnaround in the two largest states" with the most outstanding home loans, said Jay Brinkmann, the Mortgage Bankers Association's chief economist.
http://morningsentinel.mainetoday.com/news/local/5383089.html
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Plato (427-347 BC)
Plato (427-347 BC)
