Thanks to Beth over at the WSJ for sending this one over. I rip on the MSM for not doing their jobs during the bubble (or the Iraq invasion) but damn, some of 'em are making up for lost time now (the WSJ, the FT, the Economist and more).
Too much in here to list, but I'd encourage all of you to read the full article, and know what's coming.
This is gonna be ugly, it's gonna last for years and years, and the impact of the housing crash and mortgage meltdown will be felt worldwide.
No matter what realtors on commission try to tell you.
The United States of Subprime - Data Show Bad Loans Permeate the Nation; Pain Could Last Years
As America's mortgage markets began unraveling this year, economists seeking explanations pointed to "subprime" mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.
The analysis of loan data by The Wall Street Journal indicates that from 2004 to 2006, when home prices peaked in many parts of the country, more than 2,500 banks, thrifts, credit unions and mortgage companies made a combined $1.5 trillion in high-interest-rate loans. Most subprime loans, which are extended to borrowers with sketchy credit or stretched finances, fall into this basket.
The Journal's findings reveal that the subprime aftermath is hurting a far broader array of Americans than many realize, cutting across differences in income, race and geography. From investors hoping to strike it rich by speculating on condominiums to the working poor chasing the homeownership dream, subprime loans burrowed into the heart of the American financial system -- and now are bringing deepening woe.
"We had an aggressive home-mortgage industry trying to get people into homes they couldn't afford at a time when home prices were very high. It turned out to be a house of cards," says Karl Case, an economics professor at Wellesley College. "We're in the early stages of the cleanup."