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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth
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To: geode00 who wrote (138325)9/23/2008 7:39:41 PM
From: Lizzie Tudor  Read Replies (1) of 173976
 
Something like 9% of all mortgages are in some stage of default,

If you got that from that same source "mortgage bankers association" that number has been discredited... or its an estimate take your pick. That mortgage bankers association had a default rate of almost 5% in 1999, I found an old article on the web regarding that. Very hard to believe 5% defaulted in 1999 but if they did then 9% today is somewhat conservative if you do an extrapolation of now vs then. I think the real culprit is they may be counting second mortgages but those are not the same beasts as the firsts.

I heard on the radio today from a reliable interview that there are 50 million mortgages in the US (first mortgages) and of those, 1.7 million are in default. You can listen to it on NPR.com, the Planet Money article.

Under normal circumstances 1.7 million mortgages or 5% defaulting is never good but it is manageable, the problem here is that the underlying derivatives that Wallstreet made out of these assets make it impossible to value ANY mortgage backed security and therefore all MBSs are worthless.

This is like the 50th time derivatives have brought a bank or a whole banking system down- ENOUGH already.
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