Thursday, July 19, 2007

Flashback from April 2007

M&T Bank Woes: First Evidence of Contagion from Sub-Prime to Near-Prime Mortgages

A number of observers – including this blog – have been arguing that the mortgage problems are not a niche issue involving only sub-prime mortgage as many near-prime (Alt-A, etc) and prime mortgages have the same reckless features (low or zero down payment, low or no documentation of income and assets, interest rate only, negative amortization, option/hybrid ARMs) of the sub-prime ones. We have now some first hard evidence that the trouble in near-prime Alt-A loans (typically low/no doc mortgages) is now emerging. As reported by the press, M&B Bank is now showing trouble both in its sub-prime and Alt-A loans.

Posted by lvmreader @ 12:16 PM (526 views)
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2 thoughts on “Flashback from April 2007

  • tony marshall says:

    Define ‘Sub-prime’ – anyone taking on more than they can afford, or could afford if things got a bit sticky, is ‘sub-prime’, but probably not defined as such by those who report the statistics.

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  • Amen Mr Marshall.

    And therein lies the rub. The lending in the last 10 years – It is probably mostly subprime as per your definition.

    MEWing on inflated house prices is actually very dangerous. Have people marked-to-market the actual houses? With falling prices, MEW should be falling somewhat.
    But it isn’t.

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