Prime & Alt-A Defaults Surging Says S&P

Posted on August 26th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

But, you already knew this if you have been reading the blog.  Jumbo Prime and Alt-A are under heavy pressure with month-over-month default rates that surged.  These classes of borrowers and loans are highly susceptible to the negative-equity influences that are the leading cause for loan default among.

This is a major problem very few are factoring in when forecasting future events the housing market. Everyone thinks ‘subprime and done’. Nope! Subprime was the proverbial ‘canary in the coal mine’ to the great housing and mortgage implosion.

“NEW YORK, Aug 22 (Reuters) – Delinquency rates on many better quality U.S. mortgages last month outpaced those on the subprime loans that helped spark the U.S. housing crisis, Standard & Poor’s reports showed on Friday.

 Total delinquencies on prime “jumbo” loans and “Alt-A” loans made in 2007 rose at a 7.3 percent and 9.12 percent rate, respectively, from June, the rating company said. These loans require less proof of repayment but were made to borrowers with credit scores above subprime. For subprime loans, the rate of delinquency rose 7.0 percent rate last month.”

Overall, delinquencies on 2007 prime jumbo loans rose to 3.22 percent in July, while Alt-A loan delinquencies increased to 14.56 percent, S&P said. Defaults on subprime loans from last year hit 31.25 percent.

The 2007 vintages are even worse than 2006 for two reasons: a) prices were at all time highs in 2007 so these borrowers are further underwater. b) underwriting standards fell apart in the first half of the year.

“Delinquencies on loans made in 2006 exceed those of 2007, probably because of the longer period from origination.

“The more recent vintages are suffering more performance related issues sooner, and to a greater degree,” Pollsen said.”

Best, Mr Mortgage

Source: Reuters

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21 Responses to “Prime & Alt-A Defaults Surging Says S&P”

  1. We are facing a double-whammy of pay-option ARM recasts and IO ARM resets. The only thing that has delayed the IO ARM reset implosion is that loan indices (most notably LIBOR) are at a managable level. Otherwise, we would already be in the middle of a disaster due to payment spikes on these loans. Rest assured the indices will be going up and the pain is only being delayed.

    There are either going to be massive numbers of foreclosures or massive numbers of mods (mostly principle write-downs are needed). The lenders can choose which route they want to take. Either way, it’s going to leave a mark (to market).

  2. Mr. Mortgage,

    Why did you delete your Linkedin profile that was full of a fake employment history? I have a copy of it, but I see that you took it down. You are busted! The only experience you have is a couple of years in a chop shop. You are not licensed either. You are full of crap and a big ole liar. I will post your bogus resume the next time I see you lie about your long career.

    See ya, wouldn’t want to be ya!

  3. -Why are you such a fake?

    I didn’t delete anything. My linked in profile does not give any actual names of the mortgage companies or banks at which I worked. It lists the name of a consulting company which I owed for 15 years.

    Do what you must. But I suspect you have found the wrong person. By the way, sorry you mortgage career is shot.

  4. Mr. M. the message that you send has nothing to do with your past. It is from all accounts factual in nature to me. I have seen no sign of dis-honesty like we see in the MSM each and every day. This blow hard scum bag is simply riding you (a Troll to be sure) so let it go. If the little pansy boy had anything he would have posted it already. A-Typical bleeding heart liberal school boy for a man coward hiding behind the skirt of his mother. Nothing to worry about Mr. M. I have seen it myself before…

    Back to serious post now…

  5. It’s too bad your not doing your youtube analysis anymore. Listening to you discuss the intricacies of what is coming with passion carries so much more than the written word.

  6. Mr. M., pay no attention to the coward “fake.”

  7. When “fake” couldn’t find anything wrong in your message Mr M, “it’s” resorting to character attacks. Shows you’re on the right track. Keep up the good work.

    An interesting article for all to look at is http://seekingalpha.com/article/92303-looming-financial-catastrophe-a-real-inconvenient-truth

    “When George W. Bush sauntered into the Oval Office with a smaller government, non-interventionist foreign policy agenda in 2000, the National Debt stood at $5.6 trillion. During his administration the National Debt has increased by $4 trillion, or 71%, while our GDP has increased by 41%. The smaller government idea got lost somewhere in translation. This train is hurtling down the track at tremendous speed and we are headed for a wreck unless we slow the spending and debt accumulation. As a nation, we add $68,000,000 to the National Debt every hour.”

    When Warren Buffett was asked about fannie and freddie, he responded “the game is over.”

  8. Just like I said… $250 Billion will be funneled to the FDIC to support bank failures. They will not get it all at once, but they will get somewhere in that range before this is over in my opinion. 9 Banks have failed to date and 100’s more will follow, but it is not the 100 Million cost by small banks that will cripple the FDIC, but rather the BIG BANKS that fail and fail they will in due time. Heck many would be insolvent if forced to mark to market there L3 holdings today, but that “NEW” rule got postponed for later when it will be less meaningful. What a joke!!!

    Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures.

    From the FDIC:

    Ms. Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold.

    The last time the FDIC borrowed funds from Treasury came at the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered. That the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis.

  9. Here we go…

    WASHINGTON (AP) — U.S. banking industry profits plunged by 86 percent in the second quarter and the number of troubled banks jumped to the highest level in about five years, as slumps in the housing and credit markets continued.

    Federal Deposit Insurance Corp. data released Tuesday show federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.

    The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.

  10. And: why did your Linkedin profile have the company name of Mortgage Telesis, but not any other employers? I’ll tell you why: you can give your own reference for it, where the other ones would be out of your control.

  11. You are fairly ignorant. I have about a half dozen business names and DBA’s for different business segements. None of the actual ‘businesses’ make money and would not have it any other way.

    I have had seven independent consulting names since 1995 after an awesome multi-year mortgage run beginning in 1986. Remember the tax reforms on 1987. 1986 was my first year in the biz as a snot nosed retail rep.

    I don’t understand where you are going. Why are you so angry man? Lighten up. Go work or something. Help people instead of bashing those trying to.

  12. Fake obviously has nothing relevant to say. It’s one thing to bash someones views and back it up with facts. I could care less about Mr. M’s background. He could be a gypsy for all I care. What I do know is that he brings forth news that is hard to get for most of us. And backs it up. I know, cause I check. Usually he is a day to a week ahead of others that I check.
    Oh yeah, BTW, no-body is forcing you to read his profiles or posts. So …….. why are you here?

  13. So, you’re saying you’re a tax cheat? Why didn’t those businesses make it onto your Linkedin profile? And, more importantly, why did you delete it? Throw back as many barbs as you can, you are still transparent. FYI, Mortgage Telesis is NOT your DBA. If you disagree, then the DRE might find that interesting.

  14. I use my real SSN when I do work. Doesn’t everyone using a DBA who works in the independent contractor capacity?

    I think you have just about overdone your welcome. I will leave your posts up and if you would like to post anything constructive I am sure readers would appreciate it.

    Just to let everyone know, this guy is a Troll on Lansners Blog located at the link below.

    He goes by the handle ‘Provider’ and I have been alerted to him and his IP address by other blog operators from the circuit in the past.

    http://lansner.freedomblogging.com/2008/08/15/only-7-oc-zips-with-rising-home-prices-in-late-july/#comments

  15. Yes, you are “helping” people. Sure.

  16. Ah, holding back the evidence I posted. Nice move, coward.

  17. Yeah, everyone’s a troll but you.

  18. What is your problem Fake Man? Produce something of substance or be gone… You remind of a troll on another local RE board I typically post to as well. What happened? Lose a lot of money investing in condos and now they have fallen in value by 40%? Bought a 6 family and 3 months later while rennovating it the market dropped and your stuck with a depreciating asset now?

    Mr. Mortgage is indeed helping people by bringing light to an otherwise dark situation. We sure as hell can’t count on the MSM to do it now can we? If we left it to the RE agents and the NAR we would be hopelessly screwed and people like you are far to ignorant to be of any help. That leaves people like Shiller, Shiff, Mr. Mortgage, Twist, Barry, Roubini and the likes to assist folks like me and others that find their coverage of this mess quite refreshing, real, honest and above board without the hidden agendas others may have like a 6% commision or political connection.

    Go back to whence you came… Please!!!

  19. […] to the TRUTH! on Moody’s & Fitch Join S&P in Massive Alt-A RMBS Downgrade AvalancheMr. Mortgage’s Guide to the TRUTH! » Prime & Alt-A Defaults Surging Says S&P on Mr Mortgage: Breaking July CA Foreclosure Report – Foreclosures Unexpectedly […]

  20. So why is there such a horrible disconnect between the stock market and the credit markers ?

    Mystery. Manipulating the banking shares sector to induce investors with false signals. It’s incredible the level of lies, damn lies, that are boosting the banking sector shares. I absolutely cannot explain almost the enthusiasm on the junk. Who then and what is bidding up piece of shit like Wachovia and Washington Mutual ?
    Credit markets are saying tidal wave ahead and banking are saying alléluia ! Somebody is damn liar. Bet on the stock racket to be the liar and the crook.

  21. […] Prime & Alt-A Defaults Surging Says S&P […]

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