courtesy of NYT
Quite an instructive chart — Its pretty obvious that late 2006 early 2007 was when something unusual began in Sub-prime mortgages. And, not much after that Alt-A followed.
Calls of a bottom in either housing or financials have been premature. Those perennial optimists who keep incorrectly making those erroneous bottom tick attempts need to consider the following:
The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.
Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.
The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time…
While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.
Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.
Wishful thinking is never a substitute for reviewing the actual data; thoughtful analysis is better than cheerleading.
I’m just saying . . .
Housing Lenders Fear Bigger Wave of Loan Defaults
NYT, August 4, 2008