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Gremlin

Us Foreclosures Rise 93% Y/y

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Sorry it's 94% as this post is one hour old.

Once people in the USA see that house prices have gone into reverse and that their house is worth less than the morgage then the number of people opting out wil go balistic and just imagine whats that will do to the subprime sector.

I'm all for encoraging more debt on to these people, bit like stuffing their pockets full of lead before they jump overboard and do us all a faviour as they have been making a paper profit at FTB's expence and now it's heading towards pay back time

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From The Daily Reckoning

In October of this year, the big hump in mortgage resets comes – with more than $50 billion in mortgages to be adjusted upwards. Then, next year another half a trillion in mortgages is to be reset, with the final peak coming in March.

The typical subprime borrower from 2004-2006 will have to come up with about $400 per month more. Where will he get the money? Who will lend to him? And why would he borrow?

If you think the rate of foreclosures is up now – just wait until October. And if won’t just effect those subprime borrowers. Unfortunately, you could be the best homeowner in the world...maybe you’ve even paid off your mortgage... but if there is a foreclosure near your house....it could lower the value – by up to $20,000!

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From The Daily Reckoning

Cutting rates now isn't going to help either as the institutions appetite for risk has evaporated. The credit spreads ( corporate rate over base rate ) has blown out so far the mortgage reset pain is only going to worsen. Cutting base rates will improve banks profit margins and lessen their risk but aren't going to help homeowners. Much as I want a crash, millions of people will lose their homes because of poor financial advice.

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