The only question that remains is would it hurt over extended prime borrowers as much as subprime borrowers?>
I personally think so called prime borrowers are very vulnerable. That's the Bully class, subprimes are wannabe Bullies. Bully is exposed because his worth, job (half the job growth in Calf since 9/11 is RE and construction, financial related), Bubble location, etc is directly linked to the credit and housing Bubbles. He's the guy with the unused "vacation property", and condo flip in San Diego. He owns stock in WFMI, JWN and SBUX. He is a walking friggin timebomb. Look where they are, California is the key to a nuclear meltdown. In comparison , 32% of subprimes are in Calf, maybe because they live in less Bubbley locations, and thus don't have the transitory "wealth"? Calf housing fades 10%, and half the primes will become subprimes overnight.
From Fitch loan concentrations:
Prime;
2003: 25% IO, 0 neg am, 64% full doc, 47% in Calf.
2004: 44% IO, 7 neg am, 56% full doc (see how they stretch lending standards? This was 82% in 1998, not the same criteria at all), 46% Calf
1H, 2005: 30% IO, 33% neg am, 42% full doc (stretched quite a bit more, is this really a defacto subprime at this point? Regulations to affect this practice?), 55% Calf. Avg FICO score is 729, but why wouldn't it be that, robbing Peter to pay Paul. |
