Mortgages Made in 2007
Go Bad at Rapid Clip
Mortgages issued in the first part of 2007 are going bad at a pace that far outstrips the 2006 vintage, suggesting that the blow to the financial system from U.S. housing woes will be deeper than many people earlier estimated.
By 2007 the bubble was popping and lenders could all see that they needed to stop giving making loans to underqualified borrowers, right? That was exactly the problem: "Mortgage originators who profited handsomely from the housing boom "realized the game was completely over" and pushed mortgages out the door,"
Data on other classes of mortgages suggest the same trend. Freddie Mac reported Wednesday that 1.38% of the 2007-vintage loans it purchased were seriously delinquent after 18 months compared with 0.38% of 2006 loans at the same point in their life. Freddie Mac generally purchases loans made to creditworthy borrowers.
At Washington Mutual Inc., 27.2% of subprime mortgages originated in 2007 were at least 30 days past due at the end of the second quarter, compared with 24.3% of such loans originated in 2006.
Some 65% of subprime loans originated in 2007 will end up in default compared with about 45% of those originated in 2006, according to estimates by UBS AG, which looked at loans packaged into securitie
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