Subprime Mess

I found some interesting charts that show who is defaulting on home loans, and the extent of the subprime default problem ....

First up, who is defaulting:


Fixed rate borrowers are hanging in there. It's the adjustable folks that are falling out. I suspect that a lot of these are flippers, people who speculated in real estate with the assumption they'd never get stuck with a growing loan amount. Now that the music has stopped, they're finding out that there are not enough chairs or enough cash to keep these investments afloat.

Just where is the default rate a problem?




Looks like it's pretty much everywhere. California, and the Central Valley of California are some of the worst locations, all commuting distance to the high cost Bay Area. But the problem really exists everywhere.

It's also important to remember that the adjustable rate mortgage "resets" are just beginning. There are still a whole bunch of loans out there to reset with borrowers hanging on, ever hopeful that home prices and buying demand will soon rebound.