Yeah, here's another article from Bloomberg. Also, the Dow was down 242.66 today on the mortgage news.

Tricia

Here is a link that might be useful: Mortgage Meltdown

And this surprises you? Hot markets,particularly FL, were driven by low interest rates AND investors(though i hate that word in this context,better to call them flippers or daytraders)...As the demand dried up,the flippers who used the so-called hybrid mortgages are getting stuck with homes/condos they never wanted..They drop the price,which in turn makes the homes "owned" by real owners decline in value.A large amount of these peope find themselves either "even" or upside down in the home, and now with the subprime market implosion, they can't refinance, or find it difficult at best..Mortgage companies and banks are getting back to "normal" lending practices, hence, zero down,piggy back loans, etc are becoming extinct...

I believe I saw an interesting statistic that none of the more sensationalistic stories included -- it said the subprime market consisted of a not-very-whopping 6% of the US mortgage market. So kind of a non-event, actually, in the overall scheme of things, unless you were one of the investors in the stocks of subprime mortgage lenders!

Good Grief - Honestly people - it is THE NEWS - they are out trying to make people listen to them. Their job is to get people excited so they will read more!! The NAR came out today and all is well in housing and getting better.

The Dow is down NOT because of anything to do with housing but MOSTLY because of overseas markets.

The Subprime numbers are a teeny tiny part of the over all housing market and is basically meaningless to the over all pitcher.

As the REAL headlines say

Housing recovery 'likely' this year: NAR
Trade group expects subprime problems to be 'contained'

Here is a link that might be useful: NAR Report!!

Go get 'em grinder12000!

When are people going to realize that the major news outlets use sensationalism to get your attention. And then only give you part of the total picture.

The subprime market is small. Does not represent a major setback in housing growth. For those who will loose their houses, it is because they financed the entire amount. Deregulation has allowed this. If you can't put down 20% and/or the mortage payment is over 25% of your monthly income, you can't afford the house.

We need to get back to some basic economic sanity.

Enjoy the journey.

eal51 in western CT

Ok, the NAR is the group i want to believe ;)
NOT!!!!
But i agree with eal51, people buying homes they couldn't afford to begin with,sold mortgage products that doomed them to eventually default by brokers who should be arrested are the cause of this debacle..bring back the stringent standards, like a downpayment, and all will eventually be alright

Figures. We listed in Tampa today:-(

NAR?
they want you to buy high... they make more money that way!

It's like listening to the AMA say that MD's are underpaid.

The 6% subprime figure is tracked by the Mortgage Bankers Association and covers homeowners. So youÂre right, 6% of homeowners are subprime. The homeowners pool also includes the 35% who have no mortgage.

However, subprimes may represent a larger slice of the current mortgage market than you think. In 2006, 20% of the mortgage market was subprime and 20% was Alt A (between prime and subprime). Credit Suisse has an interesting report out on Mortgage Liquidity. They estimate that, given tighter lending standards (no more low docs, low down-payments, piggybacks and other exotics), 21% of last year's buyers would be ruled out of the market. Banks will (are) absolutely tighten standards to keep the regulators at bay. I donÂt know where that leaves us but it doesnÂt look like housing problems are over.

As a buyer, IÂm proceeding with great care. As for the NAR, I just wish they would explain, in detail, the basis for their predictions. It would give their reports a lot more credibility.

NAR?
they want you to buy high... they make more money that way!

Not really. Realtors do have a fiduciary duty to the seller to get the best price possible, but an overpriced market is definitely NOT to Realtors' advantage. A market in which few people can afford to buy a home doesn't put much money into Realtors' pockets. An affordable market where many people have the ability to purchase a home is best for the industry.

I keep hearing bits and pieces that FL property taxes are going to be reduced by 20% or wiped out all together. I dont know when....I think they said sales tax would increase. Again i just have heard bits and pieces, not really interested since Im moving out of FL next week

I don't think you can just blame the news. The 2nd largest subprime lender is almost BK (and it is currently delisted), others are on the ropes big time. Alt-A "accounted for 13.4% of all mortgages offered last year, up from 2.1% in 2003, according to industry publisher Inside Mortgage Finance." Subprime was roughly 16%.

Subprime allowed many first time buyers to get into homes. Heck, I used a subprime loan for my first house a few years ago (since sold in a regular loan). The fact is, that loan I used isn't available as of today! I have a few mortgage broker friends who are very nervous and they are saying that qualifications are changing every day and that they can't get loans funded. With the high prices of today, and now with loans being harder to get, the 1st time homebuyer is at risk. And they are the grease that keeps everything going...

I wonder what % of 1st time home buyers are subprime. A better question may be what % of 1st time home buyers are using toxic loans. Based on the price of houses I would guess a large %.

If they change regulations to prevent or limit the use of toxic loans it will be all but impossible for 1st time buyers to enter the market. If the number of 1st time buyers is reduced then the number of 2nd tier buyers will be reduced etc etc.

A $1 Trillion of mortgages are going to reset this year (mostly in 2Q and 3Q). When those kick in it is going to get really bad. 2007 is going to be worse than 2006 and 2008 is going to be worst than 2007.

Additionally there will be the impact of less "investors", higher new housing inventory, and job loss from fields related to RE.

What we are seeing now is just the beginning. The reaction of Wall Street is just speculation of how bad things are going to get.

Good question. I didn't have the numbers right in my first post (they are actually higher): At issue are mortgages made to people who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans - which are known in the industry as "Alt-A" mortgages - were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16 percent of mortgage originations last year and subprime loans an additional 24 percent.

Here's another good quote:

From mid-2005 to mid-2006, 29 percent of new mortgages involved no deposit by the purchaser to create some equity in the property, according to the National Association of Realtors. Analysts are worried.

The 100% loans are going away as fewer lenders can now write them... And, I mean literally, loan guidelines are changing by the hour.

I don't understand how anyone could consider the NAR a credible source of information. They have an obvious vested interest (a special interest in protecting or supporting something for the purpose of gain or benefit) in the housing market. Not only that, if anyone follows their rhetoric, even casually, they might notice how their mouthpiece, David Lereah, has continuously tried to put a positive spin on a rapidly deteriorating housing market. Wikipedia has a nice "nutshell" entry about his spinning ways.

Yes, but let's also not forget that only a modest percentage of loans in default actually go to foreclosure or even short sale.

The subprime lenders are tanking because the BANKS have cut off their funding, under pressure from the Fed and the stock market. Some are also being forced by the Big Boys to repurchase their own packaged mortgages, which is guaranteed to drive them under.

RE is still very localized - 93% of the people live on 7% of the land, mostly on the coasts. If the area has good job creation, most people will be able to keep things together. If you're in an area where job creation is negative, then yes, you've definitely got problems but you'll also have a lot of nearby company.

Why do only a modest percentage of loans in default actually go to forclosure or even short sale? My guess is that it has be relatively easy to sell the house for more that what is owed.

But today there are new items like 125% financing, negative amortization and a declining housing market. These factors may increase the percentage of loans in default that go to forclosure or short sale.

The disturbing thing about the jobs numbers is that this decline is happening in the backdrop of "full employment". In previous housing declines, there was weak employment. So once the employment picture picked up, housing would follow. Employment is already good. So what will take us out of this housing decline?

Additionally, just because someone is employed, it doesn't mean they can afford their ARM reset.