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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Cogito who wrote (35795)	3/26/2007 11:38:30 PM
From: neolib	Read Replies (1) \| Respond to of 541951

If we're really only talking about 3% of the mortgages in the US, that shouldn't be catastrophic. At a bare minimum, would you not want to convert the "3% of the mortgages in the US" into a figure that reflects the fraction of US mortgage $ they represent? Clearly way more than 3% of recent mortgages are sub-prime, and recent mortgages have two interesting points: 1) They are surely the largest, since %down is low and home prices are high and 2) they are just starting, as opposed to say being nearly finished. One should not weight a 25 year old mortgage valued at $10K as being equal to a 1 year old $300K loan, at least not for some of its effects under default. Clearly no bank will lose money if the former for some odd reason defaulted, since that home is likely >> in value than $15K, but the $300K one year old one might actually be under water.

To: Cogito who wrote (35795)	3/27/2007 8:40:37 AM
From: JohnM	Respond to of 541951

On the other hand, I've read that the actual number of sub-prime mortgages is only 2 to 3% of the total mortgages in the US. I think the number which worries everyone is the number of new and/or recent mortgages. That percentage is quite high, perhaps as high as 20 percent, though I don't recall exactly. And, second, there is a ripple effect if some unspecified portion of those subprime mortgages go bellyup. As I recall, several of the companies which were most aggressive in subprimes are in debt to certain of the fairly large US banks. Etc. Having said that, I guess none of us can tell.