optimusprime_IHB
New member
I don't know what the copyright rules are on this site but for you WSJ subscribers...
<a href="http://online.wsj.com/article/SB123310421416822271.html?mg=com-wsj">http://online.wsj.com/article/SB123310421416822271.html?mg=com-wsj</a>
Here's the gist of it...
Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes.
About 6.9% of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.
Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.
................
"There is more pain to come," says Herb Blecher, vice president of analytics at LPS.
Last month, the mounting defaults prompted Moody's Investors Service to downgrade hundreds of tranches of prime jumbo loans sold to investors as securities. Moody's has downgraded more than 75% of all prime jumbo loans originated in 2006 and 2007 that carried the top rating of triple-A.
From 2002 to 2006, banks originated an average of $557 billion a year in jumbo loans, according to Inside Mortgage Finance, a trade publication. About 40% of the total was sold to investors as securities.
................
Nearly 25% of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse. That figure would increase to 42% given home-price declines of 15% over the next two years.
The delinquency rate on jumbo loans still is far lower than that of subprime mortgages and Alt-A loans, a category between subprime and prime. Both those delinquency rates now exceed 17%.
<a href="http://online.wsj.com/article/SB123310421416822271.html?mg=com-wsj">http://online.wsj.com/article/SB123310421416822271.html?mg=com-wsj</a>
Here's the gist of it...
Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes.
About 6.9% of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.
Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.
................
"There is more pain to come," says Herb Blecher, vice president of analytics at LPS.
Last month, the mounting defaults prompted Moody's Investors Service to downgrade hundreds of tranches of prime jumbo loans sold to investors as securities. Moody's has downgraded more than 75% of all prime jumbo loans originated in 2006 and 2007 that carried the top rating of triple-A.
From 2002 to 2006, banks originated an average of $557 billion a year in jumbo loans, according to Inside Mortgage Finance, a trade publication. About 40% of the total was sold to investors as securities.
................
Nearly 25% of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse. That figure would increase to 42% given home-price declines of 15% over the next two years.
The delinquency rate on jumbo loans still is far lower than that of subprime mortgages and Alt-A loans, a category between subprime and prime. Both those delinquency rates now exceed 17%.
