Wednesday, March 14, 2007

Delinquent Subprime Loans

From the Wall Street Journal (hat tip - TMTGM):

By all accounts, the market for "subprime" mortgages -- home loans made to people with poor or sketchy credit histories -- has unraveled with impressive speed and intensity. In some parts of California, the proportion of seriously delinquent subprime loans has quadrupled in the past year to about one in eight, according to data provider First American LoanPerformance.
From the chart:
Metropolitan areas with the highest incidence of delinquent subprime loans
Subprime loans delinquent by 60-plus days

#6 Sacramento
  • Dec 2006: 14.1%
  • Dec 2005: 3.4%
#7 Modesto
  • Dec 2006: 13.2%
  • Dec 2005: 3.4%
#8 Stockton-Lodi
  • Dec 2006: 12.7%
  • Dec 2005: 3.5%
#9 Merced
  • Dec 2006: 12.2%
  • Dec 2005: 2.4%
#10 Yuba City
  • Dec 2006: 11.4%
  • Dec 2005: 2.6%
UPDATE: From the Central Valley Business Times:
Tsunami of foreclosures may wash over Central Valley

As the so-called “subprime” market – the industry that spawned the no money down home buying spree – is rocked by financial failures, the waves of the financial storm could wash over the Central Valley, says an expert on the industry.
...
A CRL [Center for Responsible Lending] study reveals that millions of American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market, he says.

And some of the worst may happen in the Central Valley, he says. "Central Valley metropolitan areas had among the highest projected foreclosure rates of any metropolitan areas in the country," Mr. Leonard says. "In the short run, we’re gong to see a lot of real damage … in terms of foreclosures among large numbers of subprime borrowers with concentrations in places like the Central Valley."

15 comments:

anon1137 said...

As you know, I watch foreclosure numbers on realtytrac.com. During the last week, preforeclosures (borrowers who have rec'd NODs?) in city of sac approx. doubled:

3/5: auctions = 829, preforeclosures = 1296, bank owned = 1894

3/12: auctions = 894, preforeclosures = 2532, bank owned = 2006

Gwynster said...

Wow that is indeed an impressive climb.
I'm going out for sushi with my ill-gotten gains and hope to hear more sob stories at the bar >; )

cba said...

USA Today list of delinquencies by state lists California as number 42 (first is worst) in the nation.

link: http://www.usatoday.com/money/economy/housing/2007-03-13-foreclosures_N.htm

Cmyst said...

I was driving to a meeting today on the backroads from EDH to South Sac. On Calvine Rd. on the old Elk Grove side there is a fairly large, fairly newly-constructed house on a large lot with "Bank Owned" plastered on the For Sale sign in front. And across the road, there are about 10 properties in a row all being offered by the same RE company.

Real said...
This comment has been removed by a blog administrator.
rocklin renter said...

I absolutely cracks me up how some people think that real estate transcends economic fundamentals.

Like it gets a free pass or something.

Laughable.

Gwynster said...

Real, most of my gains are making better then 5% right now which is sure better the banking on appreciation in this market. BTW - we're you leaving or gones or something equally pleasureable?

Real said...
This comment has been removed by a blog administrator.
Diggin Deeper said...

rocklin renter said...

I absolutely cracks me up how some people think that real estate transcends economic fundamentals

Right on RR. It's no different from any other market whether it be tulips, stocks, coins, or antique cars. Prices go up or down based on the underlying fundamentals. If real estate prices go way up because money is cheap, when money becomes expensive, it can go way down. Unfortunately, Sacramento doesn't have the sexy zip codes that seem to insulate other market areas. It's probably going to fall a lot further than most people want to believe.

Diggin Deeper said...

Housing mess risks recession unless Fed cuts

http://news.yahoo.com/s/nm/20070315/bs_nm/usa_economy_merrill_dc_2

Merrill Lynch says we're headed for recession unless the Fed cuts interest rates.

Former Fedhead Greenspan warns that subprime mess could spill over to other economic sectors. He also said that the country needs a 10% rise in housing prices to get out of this mess.

Now how would he go about creating a 10% rise in home prices? Maybe dropping the fed funds rate by a few hundred basis points? Hey Greenie, any recession, housing bust, foreclosure, or bankruptcy due to real estate... is on YOU!

cba said...

Here is the rest of the Merrill qoute from the article noted above

If correct, the prospects of this scenario will prove troubling for equities investors, who could face a stock market decline of 30 percent or more as measured by the S&P 500 index <.SPX >, the brokerage said.

Run from real estate and stocks!!

Dvo said...

Gwynster,

I'm also getting delicious returns on my 'huge chunk'...

...but the yoke's on me. I STILL can't afford anything decent in Davis. Come on, ARMs! Reset already! Then comes Carnage 2.0!

Got Fundamentals?

Diggin Deeper said...

Talking heads can't seem to get a consensus. Raise rates, no lower them, no leave them alone! The problem is that the damage was done years ago and there's no fix in Bernanke's bag. Greenspan left him painted into a corner with no real exit unless the economy soft lands and the air trickles out of the balloon(s) slowly so as not to take other economic sectors with it. This should get interesting given Big Ben's aversion to deflation.

Any bets on which way rates will go and when?

Perfect Storm said...

The Wall Street Journal Online had a funny comment in their Marketbeat section about the pink sheets listing....they said that you can pronounce the ticker symbol NEWC like the word "nuke", which is basically what happened to New Century...they got nuked!

Perfect Storm said...

From Brokers Outpost

option one is...almost done...we will see what happens.....But Argent laid off 80% of there work force today!...80% out of the orange,ca office and the whole NY office AE,VP,didnt matter...there done for!

source....multiple argent underwriters, and management from the orange,ca office!

Sucks.....but im still doing business!

Argent History??? Oh that would just be a damn shame.