Subprime Mortgages and Market Datapoints

Some fascinating data from the WSJ on real estate:

• Nearly 1.2 million foreclosure filings were reported last year, a 42% rise from 2005. That is a rate of one in every 92 U.S. households.

Colorado, Georgia and Nevada had the nation's highest foreclosure rates last year, according to RealtyTrac. Among the top 100 metropolitan areas, Detroit, Atlanta and Indianapolis topped the list.

About 80% of subprime mortgages today are adjustable-rate mortgages, or ARMs, that have been nicknamed "exploding ARMs" because they have low fixed-interest payments in their first few years but then usually adjust to higher interest payments.

Creative new subprime loans - "piggyback," "interest-only," and "no-doc" loans, among others - accounted for 47% of total loans issued last year. At the start of the decade, they were less than 2% of total mortgage loans.

Borrowers have never been more leveraged. Loan-to-value ratios, the loan amount expressed as a percent of the property value, have grown to 86.5% last year from 78% in 2000.

Source:
The Subprime Market's Rough Road
NICK TIMIRAOS
WSJ, February 17, 2007; Page A7
http://online.wsj.com/article/SB117167930652011972.html