We just saw the release of the foreclosure numbers from the MBA. No surprise that foreclosures hit a new record, but there are little "gems" hidden inside the report.
"Adjustable-rate loans are performing "much, much worse than their fixed-rate counterparts," he said. Subprime ARMs accounted for 43.0% of all new foreclosures during the third quarter, even though they make up just 6.8% or all loans outstanding. Prime ARMs made up 18.7% of the foreclosures started, and make up 14.5% of all outstanding loans."
That is what was reported in MarketWatch and it reveals a different reality than what has been portrayed in the media and government. The painted picture is that of a homeowner facing foreclosure being "subprime" and due to their mortgage rate adjusting higher, beyond their affordability level.
Well, since most Subprime loans are ARMs and those represent 43% of the toal, that leaves up to 57% as being Prime loans, you know those who had credit that wasn’t worth screwing up.
Additionally, look at the total ARM calculation and that represents a total of 61.7% of foreclosures, including the Prime ARMs. That means that nearly 40%, 38.3% to be exact, are actually fixed rate mortgages!!!
Those numbers reveal a completely different reality than what is being portrayed and simply enhances the fact the government should just let the foreclosures run their course and we will all be better off.
Writer for national real estate opinion column AgentGenius.com, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.
Brian Brady
December 10, 2007 at 7:51 am
The payment adjustment is such a minor factor contributing to foreclosures. I’m reading that it’s less than 2% of all foreclosures out there.
Amen to your concluding sentence.
Benn Rosales
December 10, 2007 at 8:10 am
the debate over the weekend was basically two points:
plan creates a softer landing for lenders
plan ensures we’ll have a crisis through 2013, meaning real estate will suffer longterm.
I guess it depends which side of the wallet you come down on. I for one see it as a no win situation, it is what it is. There is no easy way out or easy fix.