February 26, 2007

UK Times headline: US home repossessions at highest level since 80s

More MSM coverage of the Great US Housing Crash over here in the British papers. A bit odd, considering England will suffer a far greater housing crash than even the US one day soon. I guess they want to show the idiots over here that yes, housing prices can fall, ponzi schemes can end.

Repossessions of US homes are set to hit their highest level in decades after the housing slow-down put millions of “sub-prime” borrowers at risk of default. And the impact will be felt by investors worldwide.

One in five mortgages taken out by high-risk creditors in the US in 2005 and 2006 will end in repossession, “exceeding the worst foreclosure experience in the modern mortgage market, which occurred during the ‘oil patch’ disaster of the 1980s”, according to the Centre for Responsible Lending.

Brad Hintz, a banking analyst at Sanford C Bernstein, said: “So far, the fallout looks to be confined to the homeowners, the reputation to some of the brokers who have packaged the sub-prime mortgages into potentially loss-making bonds and the losses to those investors. But the big fear is that investor concern about credit risk spreads from mortgage-backed bonds to the entire fixed-income world. This would, in turn, raise the cost of borrowing across the board as lenders seek to stem a flight to safer government bonds.”

Ben Bernanke, Chairman of the Federal Reserve, is concerned. “We have been following it carefully. It’s obviously very bad for those who borrowed in those circumstances, and it’s not good for the lenders, either, who are taking losses,” he said last week in his semiannual economic report to Congress.

The extent of the fallout may be anybody’s guess, but at the very least the flow of bad news from subprime specialists is likely to continue for some time to come.


Anonymous said...

Bernanke knows it's not the lenders taking the losses - it's the holders of the debt. The lenders sold it off a long time ago

veritas_faust said...

Would this be a good time to get in the REPO business.

"If the world hands you chicken shit...make chicken salad!!!"

No really they do it that way all the time in Dahgestan.

tmaioli said...

The game is afoot

Anonymous said...

Soon cable channels will each pick up their own reality tv show on the repo man.

Anonymous said...

So who did they sell the debt to? Whose pension fund is going to be left holding the bag?

Anonymous said...

Ahh the lazy mind of the media.

US foreclosures highest since 1980s!!! Oh NO!!!

Is that as a % of all homes or just number of foreclosures?

In 1990 the US populationwas 250 mil. Today it's 300 mil or 20% higher.

If foreclosures are less than 20% higher than 1990 numbers, I'm not sure this means much.

But if anyone actually took a minute to think about pesky thinks like percentages, growth rates, ratios, it wouldn't be as much fun throwing out alarmist blog posts, would it?

Frank said...

Haha! I have many "friends" in Scottsdale who can't understand why I haven't "bought" and spend 90% of their time bragging about being "homeowners." Out of curiosity I pulled up their records on the County Recorder website and found out that ALL OF THEM are 100% financed with piggyback loans, and can pretty much tell they're having trouble keeping up with the payments, especially the idiots who went with option-arm loans.

When I lived in North Scottsdale off Pima and Happy Valley in the "rich" part of town I used to see repo men in the neighborhood almost every day picking up BMWs and Porsches, but now it looks like the house repo man is coming!!! LOL!

Anonymous said...

"One in five mortgages taken out by high-risk creditors in the US in 2005 and 2006 will end in repossession..." I really expect these "high-risk" loans will be no where near 1 in 5, but rather a lot closer to 4 in 5 by the time it's over.

Anonymous said...

Frank, what's the website URL for looking up that info in Arizona?

Anonymous said...

Frank, I'm in phony as Hell North Scottsdale. Can you tell me the address for the county recorder's? Thanks

Frank said...

Just do a Google search for "Maricopa County Recorder" and you'll get the site.

Daphne64 said...

It's a sign of the times (a bad sign) that EVERYONE - even Keith, so far as I know, took that Center for Responsible Lending estimate of 20% at face value and didn't look at the original document.

It only made mathematical adjustments for factors with a history that could be easily modelled. It did not factor in the uber riskiness of neg-am ARM's, no down payment mortgages, and the combination thereof.

I think more than half of subprimes are going to tank.