Welcome To The Golden Minerals HUB On AGORACOM
Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
Message: Prime Borrowers' Defaults Soar
Over the past couple of years, lending defaults originated mainly from subprime mortgages. However, the latest housing data indicates the prime mortgage defaults are skyrocketing. Since the fall-out from defaulting subprime mortgages has been nothing short of catastrophic so far, one can only imagine the further financial damage that will be wrought in 2009 as failed prime mortgages add their excessive weight. Note too that the subprime damage occurred when financial markets were strong and able to absorb some of the losses. Now however, economic and banking conditions are barely hanging on they will be forced to fight another oncoming heavyweight.
Good luck Barack and Tim - VHF
-
Foreclosures, delinquencies skyrocketing among 'prime' borrowers
Los Angeles Times
Nationwide, 3.07% of prime mortgages were in foreclosure or at least 60 days late in the second quarter of this year, easily topping the previous record of 1.97% set in 1985.
By E. Scott Reckard
November 24, 2008
November 24, 2008
By this year, the bleeding housing market had drained the equity from Judy Jones' home in Murrieta, but her life still seemed secure. She had a government job, after all, and a 30-year fixed-rate mortgage at 5.875%, unlike the shaky, variable-rate loans of many of her Inland Empire neighbors.
Then her employer, the city of Corona, decided to deal with the economic slump by eliminating 112 positions, including Jones' job as a code enforcer. Last month, at age 61, she joined a surge of once-solid borrowers who no longer could afford their mortgages.
Then her employer, the city of Corona, decided to deal with the economic slump by eliminating 112 positions, including Jones' job as a code enforcer. Last month, at age 61, she joined a surge of once-solid borrowers who no longer could afford their mortgages.
Every week at church, somebody else is out of work," Jones said. "I've been a homeowner a long time -- the last 10 years as a single mother -- and I never missed a payment. Now look at me. And it could be you -- any middle-class person who goes to work today could be walking out the door of a foreclosed house in a couple of months."
Jones' concern is well-founded. Although soaring defaults on subprime loans and other dicey mortgages are a well-known cause of the country's financial crisis, delinquencies and foreclosures now are skyrocketing among "prime" borrowers -- people with good credit histories who documented their incomes when applying for their relatively straightforward mortgages.
Nationwide, 3.07% of prime mortgages were in foreclosure or at least 60 days late in the second quarter of this year, the latest period for which the Mortgage Bankers Assn. has figures, easily topping the previous record of 1.97% set in 1985.
Jones' concern is well-founded. Although soaring defaults on subprime loans and other dicey mortgages are a well-known cause of the country's financial crisis, delinquencies and foreclosures now are skyrocketing among "prime" borrowers -- people with good credit histories who documented their incomes when applying for their relatively straightforward mortgages.
Nationwide, 3.07% of prime mortgages were in foreclosure or at least 60 days late in the second quarter of this year, the latest period for which the Mortgage Bankers Assn. has figures, easily topping the previous record of 1.97% set in 1985.
In California, with a jobless rate topping 8% and home prices down more than 40% from their peak and falling, the situation is significantly worse, with 4.15% of prime loans seriously delinquent. That far exceeded peaks of about 2.6% reached in the recessions of the 1980s and 1990s.
The epidemic of bad loans and lost homes among prime borrowers has only worsened since the second quarter ended, according to other, more recent data.
By putting more foreclosed homes on the market, the trend is likely to further depress housing prices, intensify the mortgage-related crisis afflicting the financial system and exacerbate the recession most economists believe is already underway.
"We should be really worried," said Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, a private research firm in Palo Alto.
And as home prices continue to fall, delinquent borrowers are more likely than ever to end up in foreclosure.
"During the rising market, if you lost your job, got sick or your marriage failed you always had a parachute: Sell the house, pay off your mortgage and have something left to start again," said consumer finance expert Elizabeth Warren, a professor at Harvard Law School. "Or sometimes you could use your home equity line of credit to get by."
But now, for most people, "that parachute has gone up in flames," Warren said.
The epidemic of bad loans and lost homes among prime borrowers has only worsened since the second quarter ended, according to other, more recent data.
By putting more foreclosed homes on the market, the trend is likely to further depress housing prices, intensify the mortgage-related crisis afflicting the financial system and exacerbate the recession most economists believe is already underway.
"We should be really worried," said Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, a private research firm in Palo Alto.
And as home prices continue to fall, delinquent borrowers are more likely than ever to end up in foreclosure.
"During the rising market, if you lost your job, got sick or your marriage failed you always had a parachute: Sell the house, pay off your mortgage and have something left to start again," said consumer finance expert Elizabeth Warren, a professor at Harvard Law School. "Or sometimes you could use your home equity line of credit to get by."
But now, for most people, "that parachute has gone up in flames," Warren said.
-
New Message
Please
login
to post a reply