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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (46142)	11/26/2005 7:04:04 PM
From: Ramsey Su	Respond to of 110194

Russ, (this is a "thinking out loud" post, as I try to digest a bunch of misc data I found. I apologize if it appears to be incoherent) Your mentioning of Alt-A prompted me to think about the subject of how it is different this time around in comparison to the previous cycles. Digging around my old files, I found a historic mortgage delinquency chart from an unidentified source. Since I have no clue where it came from, I don't know about the accuracy of this information. If the data is correct, I am quite surprised to see the highest delinquency rate since 1979 was only 6.07% during the 1st Qtr of 1985. The next highest was the 2nd qtr of 1991 at 5.20%. The devastation of the S&L industry only resulted in a 5.2% delinquency rate. The actual foreclosure rate mathematically can only be lower. The 20% prime rate of early 80s only resulted in a 6.07% delinquency rate. The historic low (from 1979 on) was the 1st qtr 2000 at 3.74%. MBAA publishes delinquency data. Unfortunately, it is quarterly and delayed for 2 months. This is the latest. mortgagebankers.org mortgagebankers.org Playing around some other numbers, it appears that in recent years, just under 20% of prime loan delinquencies progressed to the foreclosure stage while over 50% of subprime delinquencies progressed to foreclosure. I have no historical data showing how many loans in foreclosure were actually completed. So far I am drawing these preliminary thoughts: Defaults are lower now but at over 4%, it is higher than historical lows quite significantly. Foreclosures are lower but have similar pattern to defaults. Actual REOs appear to be much lower but unfortunately I have nothing to compare to. Is this data confirming that today's borrowers are stressed but appreciating real estate values bailed them out time and again? Well, I need to think about this some more but I have to run now. Will try to pick up from here later. Ramsey