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More Than Half Of Us Property Foreclosures Relate To Prime Loans

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More than half of US property foreclosures relate to prime loans

More than half of property foreclosures in the US now involve prime mortgages and the real estate market may not stabilize until 2011, it is claimed.

The National Delinquency Survey from the Mortgage Bankers Association shows that foreclosure activity was at an all time high in the first quarter of 2009.

The survey shows the delinquency rate, which excludes homes in the foreclosure process, hit 9.12% in the first three months of 2009 compared with 7.88% in the last quarter of 2008.

It means that 12 % of all mortgages are now at least one payment behind. The ongoing severity of the real estate crisis is demonstrated in the seriously delinquent figures which relate to loans that are 90 days or more behind. It is now at 7.24%, some 94 basis points higher than the last quarter of 2008 and an astounding 321 points higher than last year at the same time.

Total foreclosure inventory was also up, with 3.85% of all mortgages somewhere in the foreclosure process at the end of March 2009 compared with 3.3% in by December 2008.

More worringly, not only has foreclosure activity surged, it's become more widespread, as prime, fixed-rate mortgages now constitute 56% of mortgages in the foreclosure process.

The MBA said in a statement that it does not expect any recovery in the property market until at least the end of 2010 and probably it will be 2011 before things turn around.

The transient nature of the market, where people are relocating to new towns for new jobs and turning over home keys time and time again, must settle, before the housing market can begin a solid recovery, the MBA explained.

That means that the job market must take a turn in the right direction before property can do the same, which the MBA predicts will come in the first half of 2010.

Remember now, we are shadowing the US crash, with a 12-18 month delay. Add to the fact that we are leveraged by a factor of nearly two in comparison.

It's going to be a tough slog.

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More than half of property foreclosures in the US now involve prime mortgages

<heavy sarcasm>

Wow, I'm absolutely stunned to find out there's no real connection between previous credit history and the chances of losing your job!

</heavy sarcasm>

In other news, just because you've been alive for [insert your age here] years doesn't mean to say that you won't, at some point, die.

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Wow, I'm absolutely stunned to find out there's no real connection between previous credit history and the chances of losing your job!

They were just living the dream. Who cares what it costs.

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In other news, all the subprime's already been repossessed...... so of course the prime is left...... this would have been news 18 months ago - not now.

plus because of non-recourse loans, if you are leveraged to the balls, stuff it, let it go. This won't be the same in the UK. You could even take out a big prime mortgage and not pay it. Let process do its job and live rent/mortgage free having pocketed a large amount of money (not that I am suggesting this is the case).

The US is in all sorts of trouble - we all know that, and to be fair, I am surprised that one in 12 homes not in foreclosure is not up to date with the payments - though of course, there are an awful lot of homes in the US (like here) with no mortgage at all.

Edited by Rachman

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In other news, all the subprime's already been repossessed...... so of course the prime is left...... this would have been news 18 months ago - not now.

So you are saying that one and half years ago a reputable source predicted that credit worthy, less risky, mortgage clients would default en-masse?

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So you are saying that one and half years ago a reputable source predicted that credit worthy, less risky, mortgage clients would default en-masse?
of course not, but the US started turning turtle in late 2005, early 2006. The subprime was already struggling even with the economy in good shape and they were being repo'd for fun (the CMBS and ABS toxic shti). So they've mostly worked their way through the market now (in 3-7 years since they were taken out and 3 years or so after they stopped being able to remortgage) ..... so it's mostly the prime left.

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of course not, but the US started turning turtle in late 2005, early 2006. The subprime was already struggling even with the economy in good shape and they were being repo'd for fun (the CMBS and ABS toxic shti). So they've mostly worked their way through the market now (in 3-7 years since they were taken out and 3 years or so after they stopped being able to remortgage) ..... so it's mostly the prime left.

Alt-a's and option ARM's....

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That means that the job market must take a turn in the right direction before property can do the same

Very insightful statement.

But the economy was 70% driven by the housing market.

Bit of a catch 22 situation.

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More than half of US property foreclosures relate to prime loans

In isolation, that snippet is either misleading or meaningless. If 19 loans out of 20 were prime [which is probably not unrealistic], it would mean that subprime was 19 times more likely to default [which is probably also not unrealistic]

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Alt-a's and option ARM's....
I did diligence on a whole load of these for the odd hedgie (with pension fund money backing them) - they were shti - no paperwork, nothing to track them trhough and the models testing them were garbage - they gave me a £10K budget to review $227M of this shti - with a de minimis threshold of $5M - and then ignored my advice (which was, that they are sht1e and risky - then they went to ask someone else next time - who offered to do it for less and not be so negative.... - I upset their fundraising team by being blunt)

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So you are saying that one and half years ago a reputable source predicted that credit worthy, less risky, mortgage clients would default en-masse?

Pretty much so, yes.

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How many times do I have to say this... :rolleyes:

The UK housing crash is 18 months behind the US. Not 12.

The US market went YoY negative in Oct 2006 in the majority of states. Ours was Apr 2008.

I have no idea where everyone gets this 12-18 months from ?

Saying we are 18-24 months behind is just as valid as saying 12-18 months.

If we are going to be factually incorrect let's do it on the good side.... ;)

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How many times do I have to say this... :rolleyes:

The UK housing crash is 18 months behind the US. Not 12.

The US market went YoY negative in Oct 2006 in the majority of states. Ours was Apr 2008.

I have no idea where everyone gets this 12-18 months from ?

Saying we are 18-24 months behind is just as valid as saying 12-18 months.

If we are going to be factually incorrect let's do it on the good side.... ;)

Yeah, but um, yeah.

As the US market starting to crash froze the MBS market, although our crash started later, we had a bit of a helping hand. i.e. the credit crunch.

I was hoping we'd catch them up.

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Yeah, but um, yeah.

As the US market starting to crash froze the MBS market, although our crash started later, we had a bit of a helping hand. i.e. the credit crunch.

I was hoping we'd catch them up.

I think we are catching them up. :lol:

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