For the all the FR naysayers out there, I reiterate your favorite mantras: "Not in my neighborhood. Foreclosures are not going up. Nothing to see here. Nada por nada. Time to move on."
Posted on 05/23/2006 10:16:34 AM PDT by ex-Texan
29% of borrowers who took out home loans in 2005 owe more than the value of their houses
US Federal Reserve Chairman Ben Bernanke said today in Chicago, that he is concerned about the rising number of home loan delinquencies in the US. His remarks coincide with a report in today's Wall Street Journal that soaring housing prices and aggressive mortgage lending have saddled American home buyers with ever greater levels of debt, and early signs are now emerging that more people are unable to keep up with their monthly mortgage payments.
The Journal says that recent studies by several Wall Street firms point to rising delinquency rates on home mortgages that were issued last year, a period when lenders were pushing hard to keep business going as interest rates and home prices were rising. The increase in late loan payments comes as more buyers have been forced to stretch financially to afford ever costlier houses in recent years, and many homeowners have increased debt by tapping their home's equity. Analysts say that laxer lending standards on the part of mortgage lenders also resulted in higher debt loads, which some borrowers are now struggling to repay.
News : International Last Updated: May 19th, 2006 - 16:31:49
Late payments on US Mortgages rise; 29% of borrowers who took out home loans in 2005 owe more than the value of their houses By Finfacts Team May 18, 2006, 15:29
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US Federal Reserve Chairman Ben Bernanke said today in Chicago, that he is concerned about the rising number of home loan delinquencies in the US. His remarks coincide with a report in today's Wall Street Journal that soaring housing prices and aggressive mortgage lending have saddled American home buyers with ever greater levels of debt, and early signs are now emerging that more people are unable to keep up with their monthly mortgage payments.
President George W. Bush announces the nomination of Ben Bernanke as Chairman of the Federal Reserve, replacing Alan Greenspan upon his retirement in January 2006. The announcement came Monday, Oct. 24, 2005, in the Oval Office.
The Journal says that recent studies by several Wall Street firms point to rising delinquency rates on home mortgages that were issued last year, a period when lenders were pushing hard to keep business going as interest rates and home prices were rising. The increase in late loan payments comes as more buyers have been forced to stretch financially to afford ever costlier houses in recent years, and many homeowners have increased debt by tapping their home's equity. Analysts say that laxer lending standards on the part of mortgage lenders also resulted in higher debt loads, which some borrowers are now struggling to repay.
The Journal notes that mortgage delinquencies remain low by historical standards but experts worry the trend could worsen. With the housing market cooling and interest rates rising, "by the end of the year you could see a substantial increase in delinquency rates" for mortgages, says Thomas Lawler, a housing market economist.
Mortgage delinquencies historically peak around three years after loans are made, which means some of the more aggressive loans made last year might experience their biggest problems in 2008. The newspaper says that borrowers who took out mortgages in the past two years are likely to be more vulnerable should home prices fall because they could wind up owing more than their home is worth.
Twenty-nine percent of borrowers who took out mortgages last year have no equity in their homes or owe more than their house in worth, according to a study completed this year by Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, a unit of First American Corp. That compares with 10.6% of those who took out loans in 2004.
An analysis by investment bank Bear Stearns has found that delinquencies on loans originated in 2005 were in most cases far higher than on loans issued in previous years at the same point in their life cycle. "The numbers are clearly worse," says Gyan Sinha, a senior managing director at Bear Stearns. The reason: Lenders were "able to generate a lot more volume in the face of rising rates" by loosening lending standards, Mr. Sinha says. "More aggressive lending was clearly taking place," he says.
For the all the FR naysayers out there, I reiterate your favorite mantras: "Not in my neighborhood. Foreclosures are not going up. Nothing to see here. Nada por nada. Time to move on."
Let's keep buyin' them dollars, folks!
Wait until September, 2006.
What happens then?
Sept of 06'.....what are you expecting?
This isn't a housing bubble....its a credit bubble...that the Fed has finally stuck a pin in.
If this means a slowdown in the eruption of McMansion developments in my neck of the woods, this is good news to me. Absolutely tasteless, garish box-like monstrosities. About as appealing to the eye as Star Jones in a thong.
*GASP*
Usually with shabby engineering/construction techniques too.
Not me. I'm golden.
One thing I didn't notice (didn't stay for more than a second or two) the last time I saw your FR page was that you moved the link to your web site there instead of right in your article post itself.
Moving your blog promotion one layer deeper doesn't mean that you're still not just a shameless doom-and-gloom blog site promoter.
That's when his relentless pimping of newspundit.net will raise its Traffic Rank to 4,000,000.
Responsibility falls on the shoulders of the people who overextended themselves and then turned around and tried to jack up sales prices to ridiculous levels. They tried to force the market to a place where it didn't want to go, and now it's kicking back.
The Journal notes that mortgage delinquencies remain low by historical standards ...
So in other words, the economy, and mortgages in particular are doing just fine. Better than normal, in fact. Then they add this:
... but experts worry the trend could worsen.
What "experts"? How many "experts" worry vs. those that don't?
This whole article is just doom promotion, likely for anti-Bush political motives. It's total BS, just like the web site you're promoting ex-T.
Live with the truth, narby.
Have you seen the news today or read recent FR posts?
Do the search yourself: (1) Trading halted in Fannie Mae stock because of the growing accounting fraud scandal and (2) Foreclosure activity increases in California.
Like I said repeatedly before in my posts here, Fannie May is probably bankrupt.
Amen. I just spoke to a builder who specializes in the "repair" of shabbily built new homes. Oftentimes, he has to start from the foundation up. I know of one $2 million home that cost $1 million to get up to code. Sadly, our local building inspection department hasn't a clue.
I know this for sale signs are going up in greater numbers in my area and they are starting to spend more time on the market.
Riverdawg,
Could you provide a citation for that one third figure? I have no idea what the right figure is, but one third is much higher than I would have guessed. Thanks,
Drew Garrett
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