Paul Jackson at Housing Wire makes my job easy sometimes. Quite frankly, I don’t know how he finds time to crank out as many great stories as he does each day.
The piece below talks about defaults being tied to loan program type vs. quality of borrower. It is too bad LISC didn’t come to be first, I could have explained this in detail in about 7 minutes and probably charged half the $200k McDash likely. No offense McDash, you know I love your work.
Anyway, this is the primary basis for most of my analysis on the broader mortgage and housing crisis and on individual financial institutions. You old mortgage hacks out there know, that when you understand exactly how each of the thousands of varieties of loans were structured and each banks or conduits underwriting methodology, it makes predicting systemic problems relatively easy. Most of the time, I have to wait around for the data to catch up to my research…which it always does :>Best, Mr Mortgage
Foreclosure Rates Comparable Across Incomes, Study Says
By Paul Jackson – Housing Wire
-A new study, commissioned by the New York-based Local Initiatives Support Corp. and released Wednesday, argues that defaults are more generally tied to the type of loan product than to a borrower’s specific income level.
-“Delinquency and foreclosure rates for subprime borrowers were comparable across communities of all income levels,” said Michael Rubinger, LISC president and CEO.
-data from March 2007 and March 2008; they found that default rates for all loan types rose significantly over that 12-month period, with subprime defaults vastly outstripping prime defaults — not surprising at all, given that credit risk by definition should predict credit risk.
-subprime borrowers in more prosperous communities defaulted at nearly the same rate by March 2008 as those that defaulted in impoverished areas.
-“It is difficult to point to low-income communities and the homeowners who live there as the foundation for this crisis when most of the loans driving it were made in other places,” Rubinger said.
Click HERE for link to full story.
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