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Report: Subprime and Alt-A Loss Severity Hits 64.7% in June
Calculated Risk —
From Gretchen Morgenson at the NY Times: So Many Foreclosures, So Little Logic Alan M. White, an assistant professor at the Valparaiso University law school in Indiana analyzed data on 3.5 million subprime and alt-A mortgages in securitization pools overseen by Wells Fargo. ... In June, the data show almost 32,000 liquidation sales; the average loss on those was 64.7 percent of the original loan balance. Here are the numbers: the average loan balance began at almost $223,000. But in the liquidation sale, the property sold for $144,000 less, on ...
Links 7/5/09
naked capitalism —
... So Many Foreclosures, So Little Logic Gretchen Morgenson, The loss severities are shocking, over 60% on subprime and Alt-A. You can drive a truck through the mod opportunity here. 50% principal reduction and you are still ahead. ...
July 4th Weekend Linkfest!
The Big Picture —
... Real Estate
• So Many Foreclosures, So Little Logic (NYT)
• Zero Down Is a Foreclosure Factor (Duh)
• Cracked Houses: What the Boom Built (WSJ) EZ credit + Unscrupulous Builders = Falling apart new houses
• Negative Equity + Subprime = Default (NY Fed)
• Thaler on Mortgages Made Simpler (NYT) The behavioral economist on how to avoid another mortgage meltdown
• Another wave of foreclosures is poised to strike (LA Times) ...
PPIP: Looks Good On Paper, But Putting It Into Practice Is A Totally Different Ballgame
Daily Markets —
... a greater level of delinquencies, defaults, and foreclosures and thus they are not willing to pay the price banks desire. 2. FASB’s relaxation of the mark-to-market: allows the banks to value these securities at levels above market and avoid taking the loss if they were to sell through the PPIP. Banks can not avoid the loss, though, as the underlying loans continue to suffer higher levels of defaults. The New York Times highlighted this exact point this past Sunday in an article, So Many Foreclosures, So Little Logic, But the most fascinating, and frightening, figures in the ...
Researchers: "Few Preventable Foreclosures"
Calculated Risk —
... the loan, it can prevent a foreclosure. This is clearly a good outcome for the borrower, and possibly good for society as well. But the key to the appeal of renegotiation is the belief that it can also benefit the lender, as the lender loses money only if the reduction in the value of the loan exceeds the loss the lender would sustain in a foreclosure. all emphasis addedJust last week, Gretchen Morgenson at the NY Times made this argument: So Many Foreclosures, So Little Logic [T]he most fascinating, and frightening, ...
