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Foreclosure Rates Driven by Subprime Mortgages and Alt A Home Loans

In a recent Housing Wire article, Paul Jackson, created a clever analogy of the foreclosure crisis comparing it to a highway pileup accident, where one driver comes to a stop and then many more run behind it.  The national loan modification factories continue to attempt to negotiate loan workouts with the publically traded mortgage lenders.  These are the same mortgage lenders that continue to count the money they received in government bank bailout plan that has now benchmarks no reporting and apparently no obligations.  Supposedly the banking institutions claim to be following a foreclosure moratorium, yet millions of Americans continue to lose their homes to foreclosure. 

New loan performance data was released last week by Clayton Holding and the report highlights the foreclosures and how the “Alt-A” and subprime mortgage loans continue to default. Jackson summarizes the data like this: increasing 60+ day delinquencies, slowing pre-payments, increasing rolls except for foreclosures and decreasing cure rates.

Among subprime mortgage loans in 1st position, the 2006 and 2007 mortgages continue to lead delinquencies and mortgage defaults: Sixty + day delinquencies rose 4.16% and 6.41% from month-ago totals, respectively, Clayton reported. More than 43% of the 2006 subprime vintage is now severely delinquent. Cure rates fell a whopping 17.54% and 11.40%, respectively, for the bad credit mortgages and Alt-A home loan as well.  And to think that FHA home loan programs have taken over the majority of subprime mortgages since 2006.  The burden of FHA loans may be hindered if foreclosure rates continue to rise.   Read the complete Paul Jackson Article >

Posted in Mortgage News, Subprime mortgage news. Tagged with , , , , , .

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