Second-quarter net charge-offs of $9.2 billion were 51 percent higher than the year before, with charge-offs for residential mortgage loans up 144 percent to $715 million. The 1.26 percent of all residential mortgage loans 90 days or more past due was the highest rate since 1994,
If the housing downturn continues, some institutions that are currently in good shape could face capital challenges resulting from losses in mortgage-related assets,"
I'm sure the institutions will survive! Have no fear!
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Eric,,, the properties over 90 days and or in foreclosure have already had the loss recognized by banks probably months ago.... stop interest accrual and reverse all delinquent interest at 90 days. Set up loan reserve also around 90-120 days to recognize potential loss and readjust quarterly.
So in a sense this is very old news...
Eric, I think the biggest portion of the loss is the consumers as usual. Lenders say that they are losing but they have other avenues that cover them from much loss. But the real argument here is that the market is downside up so why is it a surprise the the lenders are going to lose a little? People losing their homes are the big factor here.
The "sellers" are being hurt and in the end do pay the price .. Lost $$ lost credit lost equity lost time lost personal sense of security... We as REALTORS are going to made the big fat LOSERS why because when we had the chance to offer counsel to our "clients" about the risk of ARMS and interest only and all the other package we promoted to get home buyers in over their head not all of us talk our clients back from the edge instead we went to closing after closing saying how great it was to be the number 1 agent in the office, how hot the market was, ect... we failed our clients then and it will take along time for our collective voice to be respected ... so instead of asking the FHA and lenders to bail us out of this mess we need to see what we can do today to help our clients stay in the homes we sold them 3 years ago and rebuild the value of the markets we farmed into dust bowls .. REAL ESTATE in this office is about changing lives and I take that responsibility very serious. I love what I do and I do it because of that love and the ego is out to the side and the checks are only a reflection how well I did what I loved doing.
I generally agree but I think you are enforcing some myth too.
You make it sound as if every REALTOR took part in unlimited fast/easy loan advice to get the deal done. That is simply not true. SUBPRIME had/has its place. But very cautious use... for one I never had ANY client use interest only except on two occasions and those were both very well qualified and sophisticated buyers for whom such loans pose no major (actually any kind ) threat.
Second; ARMS. A qualified buyer with a conforming ARM has little if anything to worry about. It was/is the ARMS that were done to facilitate the sub-prime lenders that are the problem. FANMA, FHA. FHLMC all have ARM programs that were good ten years ago, were good last year and will be tomorrow. Reasonable caps, margins and start rates. Teaser rates and or negative am rates were the problem. Sub Prime stuff that started at 1% , had interest accrue then adjusted to 3-4% above the index (no 1% Cap) two years later... you know it will be a problem.
Your point is well taken just a little too generalized.