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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 08:12 AM   #41
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Re: Will Subprime Foreclosures Spread?

Quote:
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... You, by contrast are as cynical a pessimist as I've ever encountered.
Only because you haven't encountered me . . . Wab is an optimist on my scale.
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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 01:00 PM   #42
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by riskaverse
Wab is an optimist on my scale.
Hey, I'm always looking for the optimistic picture. I'm just finding a lot more bear food.

Here's the best I can do for the optimistic viewpoint. If you like pattern matching, 2007 looks a bit like 1996, which we all know was the start of a major bull run. Personally, I don't think so, but it's fun to imagine.

NY Time article

It is five years into an economic expansion and most Americans are still waiting for their share. Inflation is swallowing pay raises. Businesses are hiring, but forecasters worry that the economy may be about to stall.

“If this is a recovery,” the leader of the political opposition complains, “I can hardly wait for the recession.”

This may sound like the stuff of today’s headlines. But it comes from 1996...

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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 05:09 PM   #43
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by riskaverse
Only because you haven't encountered me . . . Wab is an optimist on my scale.
OK. well, good luck with that...
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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 05:41 PM   #44
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Re: Will Subprime Foreclosures Spread?

Will Subprime Foreclosures Spread?

Magic 8-ball says: "Answer unclear. Ask again later."
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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 10:51 PM   #45
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Re: Will Subprime Foreclosures Spread?

Answer is yes...

Was kinda watching Nightline and they were showing a location that had 'thousands' of forclosures... they were auctioning (I believe 12 or 20, can't remember) homes, but only ONE sold at auction... so, the houses were not even good enough to buy at auction...
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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 11:47 PM   #46
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by wab
If you want the bearish view, let me introduce you to an economist:

Nouriel Roubini

it will be the worst housing recession in the last five decades

The economy will experience a hard landing, at best in the form of a growth recession (growth in the 0%-1%) for most of 2007 or, more likely, an actual recession starting in Q2. Greenspan thinks a recession by Q4 has a 30% probability; the Fed’s yield curve model prices a 54% probability of a recession in 2007.

the Fed will try but will not be able to rescue the economy.
Ah, Nouriel. He is the resident Permabear guest on Kudlow & Co.
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Re: Will Subprime Foreclosures Spread?
Old 03-20-2007, 11:54 PM   #47
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Re: Will Subprime Foreclosures Spread?

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Originally Posted by Alex
Now about those junk silver coins, how many bags do you have hoarded in your fallout shelter
I purchased many ounces of silver between 2000 and 2001 at prices ranging from 4.65 to 5.25. Sold in 2006 between 12.50 and 13.75 per ounce. I was pretty happy with that outcome although right now I own no silver or gold, which is in violation of my creed to always keep at least a few percentage points of my investments in precious metals.

I find whether it is stocks or a business when you can buy for less than the cost to produce the underlying assets profits can be made. To make oneself intentionally ignorant may be blissful but is not necessarily correct.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 09:35 AM   #48
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Re: Will Subprime Foreclosures Spread?

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Originally Posted by Texas Proud
Answer is yes...

Was kinda watching Nightline and they were showing a location that had 'thousands' of forclosures... they were auctioning (I believe 12 or 20, can't remember) homes, but only ONE sold at auction... so, the houses were not even good enough to buy at auction...
I think as this happens more and more the banks will be more willing to work out an alternate solution and less likely to foreclose. Most likely I think the banks would extend the lower interest rate for a longer period. Either way the banks are not going to be in a good position.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 10:16 AM   #49
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Re: Will Subprime Foreclosures Spread?

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Originally Posted by lets-retire
I think as this happens more and more the banks will be more willing to work out an alternate solution and less likely to foreclose. Most likely I think the banks would extend the lower interest rate for a longer period. Either way the banks are not going to be in a good position.
A lot of them are doing "short sales." That means they agree to allow t he dirtbag borrower to sell the house for less than the loan payoff amount and eat the difference. That way they avoid having too much REO on the books.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 10:31 AM   #50
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Re: Will Subprime Foreclosures Spread?

What is the percentage of OVERALL loans each year that are SUBPRIME? I think everyone's being a little alarmist is saying it will put the whole economy in a tailspin................... :P

A MUCH BIGGER worry is if GM, Ford or Daimler Chrysler go out of business to the Asian Invasion...........the shock waves of ANY of those would be a lot bigger, since roughly 30% of the overall economy of the US is tieed to the car industry.............
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 10:43 AM   #51
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Re: Will Subprime Foreclosures Spread?

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What is the percentage of OVERALL loans each year that are SUBPRIME? I think everyone's being a little alarmist is saying it will put the whole economy in a tailspin................... :P
>50% in California. No idea about nationwide.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 10:46 AM   #52
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Re: Will Subprime Foreclosures Spread?

I believe its about 10% of the total market.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 10:52 AM   #53
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Re: Will Subprime Foreclosures Spread?

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Originally Posted by eridanus
>50% in California. No idea about nationwide.
have you any links or data to back this up? that sounds too high.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:09 AM   #54
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by Cute Fuzzy Bunny
I believe its about 10% of the total market.
So if 90% of the loans are good loans to people with solid credit that pay their bills, and 10% are bad, how does that bring down the whole economy??

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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:11 AM   #55
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by Alex
have you any links or data to back this up? that sounds too high.
Don't worry. Be happy. It's not that high. More like 20% for CA.

link

And there's always the map of misery for other types of toxic loans (option ARMs):

link

The problem isn't just subprime. And the raw numbers don't have to be very high. In any given year, the total number of homes on the market represents less than 5% of total home inventory, so it takes a relatively small number of foreclosures to seriously increase the inventory and seriously screw with home prices.

What I want to know is the extent of mortgage fraud that will be uncovered over the next few months. I think you'll start to understand the exact mechanism of how home prices were ratcheted up so much over such a short time. In any case, this will provide opportunites for the preforeclosure vultures. Stay tuned!
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:20 AM   #56
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Re: Will Subprime Foreclosures Spread?

Quote:

A lot of them are doing "short sales." That means they agree to allow t he dirtbag borrower to sell the house for less than the loan payoff amount and eat the difference. That way they avoid having too much REO on the books.
... and then pursuing FRAUD charges against the borrower if they: a) lied to get the loan b) or had no intention of repaying the loan.

Was the case for one sorry soul my realtor enlightened me about. Living off the equity (high life too, international vacations, Disney ...); just kept refi'ing as values increased. My realtor was working out a short sale until the banks agreed to the short sale after saying faud charges would also be filed. Owner opted for foreclosure instead. No word on if the bank is pursuing fraud charges after the foreclosure.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:27 AM   #57
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by wab
Don't worry. Be happy. It's not that high. More like 20% for CA.

link
Hmm, yeah, but we might be looking at different numbers. Either that, or I'm just remembering incorrectly.

I found a link earlier stating that 50% of California mortgages that originated in Feb 2006 were subprime, but I can't find that link now. That's a different number from how many of the total mortgages outstanding are subprime. In any case, I didn't make that clear in my post.

"Just under 15 percent of U.S. mortgages at the end of 2006 were subprime loans, according to estimates by First American LoanPerformance, the San Francisco-based mortgage data and analytics unit of First American Corp."

http://news.yahoo.com/s/nm/20070313/...sa_subprime_dc

"The share of subprime borrowers making late payments rose to 13.33 percent from 12.56 percent in the third quarter, the Washington-based group said in a report today. Foreclosures also rose on loans to borrowers with the best credit ratings, a sign of broader trouble in the mortgage market."

http://tinyurl.com/yusnlt <bloomberg link>


Edit: Ok, I was remembering incorrectly. Half of all California mortgages in 2/2006 were ARMs, not subprime. Big difference. Thanks for the challenge, Alex.
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:32 AM   #58
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Re: Will Subprime Foreclosures Spread?

the actual numbers:
Subprime mortgage loans in california = 806,000
total morgage loans in california = 5,580,000
% of subprime =14.44 %

http://www.pe.com/business/local/sto...4.3a98fef.html
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:41 AM   #59
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by wab
In any case, this will provide opportunites for the preforeclosure vultures. Stay tuned!
Speaking of these worthies, the last couple weeks my voicemail has been full of messages offering to help me deal with my pending "foreclosure problem." Since I don't even have a loan I can’t conceive of what my problem might be. So I called one of my prospective helpers, a pleasant sounding woman. Turns out that another man with my name, who also lives close to me is the one with a foreclosure problem. I think I mentioned in an earlier post that this guy has had many legal problems, at least some of which I know about because I got served with his papers. Anyway, I chatted a little with this woman and she said her business is brisk lately.

As an aside, I attended a Suze Orman lecture-love that girl!-and Suze says not to worry about subprimes, but to worry and worry big about re-pricing of many of the arms that will re-price this year.

So many worries, so little time.

Ha
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Re: Will Subprime Foreclosures Spread?
Old 03-21-2007, 11:48 AM   #60
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Re: Will Subprime Foreclosures Spread?

Quote:
Originally Posted by FinanceDude
What is the percentage of OVERALL loans each year that are SUBPRIME? I think everyone's being a little alarmist is saying it will put the whole economy in a tailspin................... :P

A MUCH BIGGER worry is if GM, Ford or Daimler Chrysler go out of business to the Asian Invasion...........the shock waves of ANY of those would be a lot bigger, since roughly 30% of the overall economy of the US is tieed to the car industry.............
i don't know about subprime but in the last 2 years well over 50% of all new mortgages in california were over 50% ARM. I think 2006 was around 60% and 2005 around 75%. you can use your imagination for the 2004 and earlier numbers.

on a nationwide level say there are around 60 million total homeowners. 10 million or so total sales every year for the last few years. If 30% average of new loans were ARMs in the last few years then potentially we are looking at 12% of homeowners will see their mortgage repriced in the next 2 years.

around 7.5 million homes resold every year. if half the ARM people try to resell we are looking at a potential of a few million extra homes for sale for the next 2 years and less buyers due to tighter credit and demographic trends of less people enterinf the workforce
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