Subprime in Some "Surprising" Spots
From the Wall Street Journal (also map & table):
SUBPRIME MORTGAGES have been cropping up in surprising spots. Typically, these loans to home buyers with the weakest credit were concentrated in lower-income or economically depressed areas. But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly. In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metropolitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier.According to the table, Sacramento ranked #1 in the country for change in delinquencies from 2005, in percentage points.
Tip of the hat to Sippn & SF Jack.
From the Tri-Valley Herald:
The number of foreclosures and "short sales" of homes equals nearly 10 percent of the total number of homes for sale in San Joaquin County, according to the Central Valley Association of Realtors.From the San Diego Union-Tribune:
Dale Gray, Chief Executive Officer for the association, said out of 4,340 total, there are 317 home sale listings for short sales, where the home is sold for less than is owed to the bank, or foreclosure, a home that has been repossessed by the bank and put up for sale again through a broker.
...
And the number may continue to grow. "They are up and we are hearing that from a lot of areas in the United States," Gray said. "A lot of these sub-prime loans... puts (the homeowner) over 100 percent of the value of the house and some of the adjustments are coming home to roost. It has gone up."
...
Anecdotal information has some home buyers remaining in the Bay Area instead of relocating and commuting for two hours from San Joaquin County. "There comes a point where it begins not to make so much sense to commute," Gray said. "Gas is $3 a gallon, wear and tear on your vehicle, emotional stress."
San Diego County placed 17th among the state's 58 counties, with a default rate of 3.3 per 1,000 homes, compared with 6.9 in top-ranked San Joaquin County.
8 comments:
Check the financial footnotes of some publicly traded companies whose investment portfolio consisted of Mortgage Backs Securities and see the addition of the impairment paragraph.
For those of you who missed my prior comments, Sacramento was ranked #1 for the rate of sub prime growth here, but - a big but - is in the middle of the pack or lower in total % of subprime and % of subprime defaults.
You would have to look to the rust belt for higher numbers and Diggn - also Stockton, RIverside, etc.
I miss nothing >; )
Is anyone else getting spammed with auction mail now?
http://www.westcoasthomeauctions.com/index.htm
I know, I know, prices could never go down in prime Roseville.
Pretty funny they added a "buyers premium." As if the buyer should pay for the privilege of taking on somebody else's problem.
Do you think they'll let the media in this time? :)
Pretty funny they added a "buyers premium."
Somebody's got to pay for the problem. Next thing we'll see is the homeowner suing the lender for "predatory" lending practices.
sippn -
What you are saying is true, but the major point of the WSJ data is that Sacramento was ranked #1 in subprime delinquency growth, even though it is (on a national scale) seen as an higher income place.
That's what is fascinating - that subprimes and the trouble associated with them, are not limited in their use to only lower income earners or areas.
To wit:
"But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly. In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metropolitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier."
sf jack said...
"That's what is fascinating - that subprimes and the trouble associated with them, are not limited in their use to only lower income earners or areas."
Right on...and although the foreclosures, bankruptcies, and NOD's shouldn't be as high within the prime group that bought exploding paper, it will have a negative affect on financial institutions that bought investment quality notes. But how about those that didn't?
An excerpt from the Reuters New Century article on Chapter 11 bears a look regarding unsecured debt New Century owes:
"Among New Century's largest unsecured creditors are Bank of America Corp. (NYSE:BAC - news), Credit Suisse Group Inc. (CSGN.VX), Citigroup Inc. (NYSE:C - news), Countrywide Financial Corp. (NYSE:CFC - news), Deutsche Bank AG (DBKGn.DE), Goldman Sachs Group Inc. (NYSE:GS - news), Lehman Brothers Holdings Inc. (NYSE:LEH - news), Morgan Stanley (NYSE:MS - news) and UBS AG (UBSN.VX), court papers show."
Looks like nearly all the major financial institutions bought the hype and will likely have to take cents on the dollar before this is over.
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