Wednesday, April 22, 2009

"Prime" Mortgages Sour

The recession is not over yet. The question: whether this trend will get even worse.

Prime borrowers at least 60 days behind on mortgages — “Delinquent” is the official term for this period — rose from 497,131 in December to 743,686 in January, according to the Federal Housing Finance Agency. This is almost double the total for October.

That report is from Fan/Fred.

HT: Big Picture


J. Strupp said...

This trend will most definately continue.

The bigger question is if you believe that delinquencies will continue to rise, therefor, accelerating foreclosures and defaults in residential and commercial loans, how on earth can the Treasury just assume that these toxic assets are "undervalued"? What happens if, say, these assets are horribly overvalued as market conditions continue to deteriorate and defaults go through the roof?

Kind of leaves the FDIC out on an island with this PPIP thing doesn't it?

Dad29 said...


Obviously, if TEOTWAWKI occurs, the assets are 'overvalued' and we are all better off becoming survivalists.

However, there are far too many variables in here to make any definitive pronouncements...

For example: there IS a residual value in foreclosed properties, and there IS a difference between the original mortgage value and the current amount owed.

We have no friggin' idea what those numbers are.

J. Strupp said...

...and that's the scary part about using the FDIC to leverage private investment capital many times over with this PPIP deal.