Sub prime delinquencies
Posted by WARREN MOSLER on March 6th, 2009
Sub prime delinquencies still headed north.
Some of it attributable to government assistance that requires borrowers to be delinquent?
Also, while 20% is certainly a high delinquency rate, and includes several years with 2006 higher and others lower,
it is still substantially lower than markets seem to be discounting, as evidenced by the discounts on very senior AAA pieces.
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March 8th, 2009 at 7:10 am
It’s true, since late 2007, banks have been telling borrowers that they had to be at least 30 but often 60 days down on their payments before loan loan modification could become an option but that was entirely up to the banks. A homeowner in default on a mortgage is at the mercy of their lender until payments are brough current. Government has nothing to do with the way it’s handled. Until now, that is.
As you know, the Obama Administration unveiled on Wednesday the Homeownership Affordability Modification and Refinance Programs. The President says this will give about 7 million homeownersa chance to stay in their homes by assuring banks they have the Federal Governments support and offering incentives to lenders to go the extra mile on modifications and rewards homeowners for staying current under the modification agreement.
There is no assistance to the subprime market under these plans. But, if the subprime lenders don’t begin offering real options to those borrowers that can document income, I think a large number of those loans stand to be modified by the bankruptcy courts.
We’re dressing the wounds but the patient is still bleeding internally. When you want to by a home which comes first, the means to cover the housing expense or the house?
What about the jobs?
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March 8th, 2009 at 7:16 am
I forgot to mention the fact Obama’s plan is available to homeowners who have kept current on their payments.
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March 8th, 2009 at 7:32 am
Housing Affordablity Plan Fact Sheet can be found here:
http://www.mortgageangel.net/xSites/Mortgage/WindsorCapitalMortgageCorp3/Content/UploadedFiles/housing_fact_sheet.pdf
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