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Finally, Some Us Real Estate Good News!

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Finally, some real estate good news! The Federal Deposit Insurance Corp., the agency that insures deposits at U.S. banks, says it overstated the severity of past-due residential mortgages last month because of calculation mistakes.

So what did they do? Miss a couple of decimal points? Count some past-due loans twice? Round up instead of down?

Hmmm, not exactly.

The agency said it accurately reported that 1.13% of residential loans are past due through the first quarter of this year.

So what's the mistake? What's the good news?

Well, it turns out that overdue residential mortgage loans, instead of reaching a 17-year high during the first quarter, only reached a 13-year high.

So overdue mortgage loans are only as bad as 1994, not 1990.

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I dont remember the world ending in 1994 - so that does sound good news. Mind you Im pretty sure it didnt end in 1990 either ;)!
during the first quarter

There's more to come in 2007; probably pushing back the US mortgage default retro factor to 1990, and bringing full blown recession back into fashion.

I'm not in the apocalypse gang, but I do think the chances are higher that when (and it really is when) things go sour across the pond, more will be pulled down than ever before due to the greater leverage and record asset bubbles that exist across the world.

It's just another flashing warning light. Might come to nought, but I think the (say) 30% chance that this is one recessionary forewarning is obscuring the reality that if it is a recession that's coming it's (say) 90% likely to be a Big One. More than big enough to blow away our housing bubble fundamentals.


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