The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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From: ChanceIs	3/1/2008 10:35:47 PM
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US negative equity Published: February 29 2008 14:48 \| Last updated: February 29 2008 19:38 Underwater loans are giving banks that sinking feeling. It turns out that second mortgages taken out when the US property market was booming are particularly painful for lenders when prices fall so fast that the house is worth less than the outstanding loan. JPMorgan Chase has just provided a blunt assessment of its $95bn portfolio of second mortgages, also known as home equity loans. The extra disclosure revealed that about 10 per cent of it is secured against homes suffering the burden of negative equity. Loans caught in this trap are particularly toxic for the banks. They punch above their weight in contributing to credit losses – 60 per cent in JPMorgan Chase’s case – with loss rates three to four times those incurred on loans that are still just – but only just – in the money. more.... Financial Times ft.com

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