Credit Suisse – 12.7% of All Borrowers Will Be Foreclosed Upon

Posted on April 24th, 2008 in Daily Mortgage/Housing News - The Real Story

This little ditty below is one of the most aggressive foreclosure projections to date out of a large-named bank. Funny thing is, it goes hand-in-hand with my Subprime/ALT-A video in which I illustrate the overwhelming similarities between the two universes. YouTube Link. For the record, I think they are being conservative but ‘12.7% of all residential borrowers losing their homes’ is quite a thought. -Best, Mr Mortgage

From Reuters: Foreclosures to affect 6.5 mln loans by 2012-report

Falling U.S. home prices and a lack of available credit may result in foreclosures on 6.5 million loans by the end of 2012. The foreclosures could put 12.7 percent of all residential borrowers out of their homes .

Credit Suisse expects home prices will fall by 10 percent in 2008 and 5 percent in 2009, before rebounding. The forecast includes the 1.2 million homes currently in foreclosure or already bank Real Estate Owned (REO). Credit Suisse sees 2008 as the peak year for foreclosures, even though they see the price bottom (25% off the peak) in 2009. The normal pattern is for the foreclosure activity to peak in the same year as housing prices bottom.

Of the 1.2 million current foreclosures, Credit Suisse estimates about half are due to subprime borrowers, and about half other borrowers (alt-A, prime). Although Credit Suisse expects a much higher percentage of subprime borrowers in foreclosure, the pool of other borrowers is much larger, and Credit Suisse expects close to 4 million other borrowers to lose their homes to foreclosure through 2012.


3 Responses to “Credit Suisse – 12.7% of All Borrowers Will Be Foreclosed Upon”

  1. The think what companies will start doing is writing down their Federal Reserve Notes. A “worthless” security if there ever was one.

  2. Credit Suisse is talking their book. They are taking a bath on toxic securities, and just trying to raise the hysteria level so governments will do more. A 12.7% rate of foreclosure would translate into about 50% defaults. This is unrealistic given that 87% of all mortgages are more than five years old and 98% of all mortgages are still performing fine. Even a 4% foreclosure rate would catastrophic. This would be far worse thant the great depression!

  3. Great post, really enjoyed it. I will have to bookmark your site for later.

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