It's not just subprime that's melting down - it's ALL OF IT (negative-am, alt-a, prime, seconds, auto, revolving, student, etc)

I hate reading "the subprime problem", "the subprime meltdown" and "the subprime crisis" in the lazy MSM. Note to the MSM and to the world:

CREDIT IS MELTING DOWN. ALL IF IT. SUBPRIME WAS JUST THE TINY FIRST WAVE. AND TRILLIONS WILL BE LOST. IT WAS A BIG HOUSE OF CARDS BUILT ON FRAUD AND GREED, AND IT AIN'T GETTIN' PAID BACK.

Should be obvious, but for some reason it ain't gettin' through to 'em yet. But it will.

Subprime losses to date – Merrill Lynch – $22.1bn
Citigroup – $18.1bn
UBS – $13.5bn
Morgan Stanley – $9.4bn
HSBC – $3.4bn
Bear Stearns – $3.2bn
Deutsche Bank – $3.2bn
Bank of America – $3bn
Barclays – $2.6bn
RBS – $2.5bn
Freddie Mac – $2bn

Mortgage Mess: Clean-up in Aisle Three!

Looks like we're not gonna need government regulation of the mortgage market after all. The market is gonna take care of this mess for us

The days of liar's loans, stated income, no-money-down, negative amortization, teaser rate, adjustable rate, high LTV toxic mortgage crap went the way of the pets.com puppet.

Why? Because the loans didn't get paid back, and the bagholders said no-more.

So all of the companies involved in that crap have gone out of business, or are on their way out.

It's funny, the Senate will hold hearings in 2008 on this disaster, all kinds of new laws and regulations will go into effect, and in the end it won't matter. The market, as it always does, cleans up its own messes.

The only problem though is that this mess was massive and historic, and the clean-up will be devastating.

A little regulation would have gone a long way in 2002, 2003, 2004. But now that the market had to do it, versus our corrupted and incompetent Congress and President, the cleanup will go on and on an on...

2007, 2008, 2009, 2010, 2011, 2012, 2013, ...

Think it's bad now? You should see the wave of mortgage resets that's about to come crashing on to US shores

The Herald Tribune had a great piece on the wave of payment shock loans resetting in the next couple of years. We're just getting started folks. When this is all over, we'll be shocked at how far home prices dropped, and how many families lost their homes.

You owe it to yourself to read the article. And get ready.

Mortgage renewals set to prick U.S. property bubble

The mortgage meltdown has arrived at something of a turning point.

So far, the loans that have gone bad were among the worst of the worst. Some were based on outright fraud, either by the lender or the borrower. In many cases, buyers were never going to be able to make their monthly payments and were instead banking on a rapid appreciation in home values.

The peak month for the resetting of mortgages will come this October, according to Credit Suisse, when more than $50 billion in mortgages will switch to a new rate for the first time. The level will remain above $30 billion a month through September 2008. In all, the interest rates on about $1 trillion worth of mortgages, or 12 percent of the U.S. total, will reset for the first time this year or next. A couple of years ago, by comparison, only a marginal amount of mortgage debt - a few billion dollars a month - was resetting each month.

So all the carnage in the mortgage market thus far has come even before the bulk of mortgages have reset. "The worst is not over in the subprime mortgage market," analysts at JPMorgan recently wrote to the firm's clients. "The reason for our pessimism is that loans originated in late 2005 and all of 2006, the period that saw peak origination volumes and sharply decreased underwriting quality, are only starting to reset in large numbers."

It isn't hard to figure out what will happen when buyers who were already stretching to afford a house are faced with suddenly higher payments. Many will manage. They will cut back on spending, or refinance their mortgage and get a new one they can afford.

Others, like the buyer I interviewed two years ago, probably planned on selling their homes after a few years all along. For them, the artificially low initial rate was a no-lose proposition.

But there are also likely to be a shocking number of people who lose their homes.

In Come the Waves: Try to internalize this Adjustable Rate Mortgage Reset Schedule.

Teaser rate ARMs didn't seem like a bad idea at the time, because that really friendly mortgage broker who cared so much about you said when the rate reset, you could just take out another ARM and also take out more cash!

Oops. Didn't quite work out that way.

And now millions and millions of Americans will lose everything.

Thank you mortgage brokers of America! Thank you Alan Greenspan! Thank you commission-junkie realtors! Thank you corrupt appraisers! Thank you greedy homebuilders! And thank you Americans for being so gullible, greedy and financially ignorant.

A house of cards

I think by now we're all pretty clear on why and how the subprime and Alt-A (liar's loan) house of cards is collapsing.

But I think you should all game this out farther down the road - all the way to seemingly safe 30-year fixed good credit loans, and the fate of the American consumer-driven economy.

Why?

Because Americans stupidly extracted their paper profits, their fake equity, and went on a spending binge the likes we've never seen. And now that fake equity is disappearing.

So many Americans will owe way more than their home is worth, many Americans with ARMs won't be able to make the higher payments, millions of Americans will lose their jobs as housing-ATM consumer driven spending dries up (especially the auto industry), and millions will now lose their homes.

Just game it out. And get ready.

The state of the home mortgage industry is one of the hottest news stories these days. And frankly, it's scaring me.

I'm worried that many folks are headed for financial trouble because they've taken on mortgages that are too large; and I'm scared that others have finally realized it wasn't a good idea to pull out all their home equity.

According to Synergistics Research, 24 percent of homeowners took out a line of home equity credit to buy a car or truck. And 8 percent purchased a vehicle with a second mortgage.

In Sunday's column, "Loan Loser: Home-Financing A Car," I challenged people to stop and do the math before using the borrowed money from their home to purchase a depreciating asset. Too many people just assume that a home equity loan is cheaper than a traditional car loan.

Your house has fallen in value from $500,000 to $400,000, while your monthly payment goes from $1000 to $4000. Yup, this is going to end badly.

I'm not surprised that people are this stupid. The lure (and lie) of "homeownership" was just too great, there was just too much pressure to buy, and not just buy any old home, nope, buy that awesome new McMansion your wife wanted so badly.

Then that nice realtor and her friend the mortgage broker, who was also so nice and caring, were able to get you that no-down, option-arm something kind of loan, and your payment was only $1000 a month! Less than you were paying in rent! See, "owning" IS cheaper than renting! No matter what HousingPANIC and those stupid bubble blogs were saying.

Plus it's always a great time to buy, and real estate can only go up and up and up! Man, are you smart or what.

Then why is my payment $4000 this month, and why did my neighbor just sell for $400,000, not $500,000?

Oh, crap.

Defaults up as home prices fall in Placer County

Default notices have risen 262.4 percent in the fourth quarter of 2006, prompting some people to put their homes on the market, even though the median home prices in Placer County continued on a downward trend. Photo

There you are, living in the house of your dreams. It cost you $500,000, but you're only paying $1,100 a month after you 100-percent financed your home with an interest-only pay-option adjustable rate mortgage, known as an ARM.

Then the market changes.Your completely financed home, after the market has cooled, is now going to cost you almost $4,000 a month for your mortgage. Welcome to the world of some of Placer County's residents.

Even though figures showed an upward trend in some areas, the overall Placer County real estate prices has continued to go down, making those who jumped in at the height of the boom feel the pinch.

"The reason for the increase is because interest rates were low for a long period of time and consumers were getting loans that normally would be out of their reach, King said.

Consumers who got 100 percent financing on negative amortization loans and other adjustable-rate mortgages are starting to feel some discomfort, and more could be on the way."

1.5 trillion in loans will be adjusting this year (nationwide). They're going to adjust a lot, some will adjust two percent," King said. "It's going to be an interesting year to see what happens with foreclosures, that's for sure."

"It's got to be tough and be scary, but if they can make that payment they should try and make it," Maki said. "Because I think the property values will come back up, they always do."