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Politics : Politics for Pros- moderated

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To: FJB who wrote (307349)	5/28/2009 11:10:20 AM
From: rich evans	of 793905

This is astounding. There are about 50 mill mortgages in the US out of home ownership of about 90 mill houses. This default train has been going on for about 1.5 years. You would think by now that most of the defaults would have occured and the pipeline entrance would be drying up. But that is not what this says. 12% of 50 mill mortgages is 6 mill. A year ago we had 10% or 5 mill in default. Most of those a year ago have cleared and been foreclosed. This is especially astounding because the rollover rate is about 100%. So once in default, you rollover to 60 - 90 - 180 days and then foreclosure. When will this ever end? The only good thing is that the 12% includes all defaults. I remember for one lender, they had 10% default at 30, 10% at 60 , 10% at 90 and 10% at 180. They are gone. The loss severity ratio for mortgages (loan recovery after foreclosure) was reported for several banks and it was about 50%. So based on this we have a lot of chargeoffs continuing. Our only chance is to try and earn the losses from net interest income and fees. You can see that attempt going on now with all the interest rate spreads between cost of funds, and loan rates and all the extra fees being charged or proposed. Rich

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