US housing, mortgage woes contagion feared

[Dover]

Source: Reuters

US housing, mortgage woes contagion feared
By Joanne Morrison, Reuters | March 22, 2007

WASHINGTON --For months as the U.S. housing market unraveled, the Bush administration, the Federal Reserve, and most economists maintained the decline did not risk hitting the economy at large, but economists are growing increasingly concerned the broad economy may take a hit.

An abrupt exodus of more than two dozen so-called subprime lenders from the market has heightened fears other lenders may soon start choking off credit to businesses and consumers.

Economists, and the Bush administration, agree falling house prices and rising defaults by borrowers with poor credit in the subprime mortgage market may mean slower U.S. economic growth this year.

"We know that the housing market will have an impact on GDP over the next six months," Edward Lazear, chairman of the White House Council of Economic Advisers, said this week.

When asked how subprime mortgage market troubles would weigh on the economy, Lazear said the banking sector was still strong, but delinquencies are high and lenders, even outside of the subprime market, have begun to tighten up credit....>

http://www.boston.com/business/articles/2007/03/22/us_housing_mortgage_woes_contagion_feared/?p1=MEWell_Pos3


No link yet.

[Warpy]

1. They're still sort of missing the point

Subprime mortgages were a very small part of the problem in most areas, so housing values aren't likely to do anything but a slow slide if a hands off policy remains in place or if only the lenders themselves get bailed out. Unfortunately, that's not the main problem. Closing down the industry that's sustained this economy for too many years is the problem.

With foreclosures on the rise, housing stock sitting on the market for months and a minor decline in housing values, the construction industry is coming to a screeching halt. Many areas have been overbuilt as speculators have snapped up properties with iffy mortgages, hoping to sell a year later for a big profit. Those speculators are starting to put those properties on the market (at least around here), properties that have never been occupied, and that's also putting pressure on spec builders to sit the season out as new construction is making a delayed entry into the market.

No new housing going up means unemployment among construction workers, lumber, concrete, electrical, and plumbing suppliers, carpet manufacturers, large appliance manufacturers, and everybody else who supplies the home building industry.

Unemployment has the nasty habit of rippling out through the whole economy as demand for goods and services is suppressed, leading to more unemployment. If something is not done to support unemployed people, the whole thing tends to become a vicious cycle.

I can't see this administration doing anything but maybe bailing out a few of the better connected subprime lenders, can you?

[Tellurian]

6. The risk is to the consumer..

those who hold mortgages with the now defunct "41" lenders..

see this link for those so named and the recent additions-

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x24229

Job loss is the major cause of subprime borrower's mortgage defaults not the subprime lender, as purported by the majority of news reports.

Private Investment Corps are waiting to bail out the subprime market.

[Bo]

7. Ca. is a Real Estate disaster right now

I work for the largest privately owned mtg bank in America. Values in the L.A. area are PLUMMETING, San Diego is shot to hell. The correction is brutal right now and will get worse. And spread East.

[TexasLawyer]

2. A scary factoid from the article

According to the Mortgage Bankers Association's most recent data,
the proportion of mortgages in the initial stages of foreclosure
during the fourth quarter of last year hit its highest in the
37-year history of the association's survey.

[Tellurian]

4. My field of expertise..

House construction continues to flourish. Initially "Good Credit" risk consumers continue to be under attack from the pnac agenda.

An in depth look at the perils before us-

click here

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=24341&mesg_id=24352

[Dover]

3. SEC probing subprime market

SEC probing subprime market
NUMBER OF COMPANIES INVOLVED IN BROADENING LOOK AT TROUBLED INDUSTRY
By Marcy Gordon
Associated Press
Article Launched: 03/20/2007 01:45:35 AM PDT

WASHINGTON - The Securities and Exchange Commission is investigating a number of companies that operate in the troubled market for subprime mortgage loans, the agency's top enforcement official said Monday.

It has been known that the SEC was examining accounting practices at Irvine-based New Century Financial, the nation's second-largest maker of subprime mortgages - higher-priced home loans for people with tarnished credit or low incomes.

But comments made Monday by SEC Enforcement Director Linda Thomsen were the first public acknowledgment that the agency was involved in a broad examination of the subprime sector within the mortgage industry.

"We're looking at subprime," Thomsen told reporters after an address to an investment conference. "As with anything, we're going to look at all the actors and their roles."...>

http://www.mercurynews.com/markets/ci_5477373

[Dover]

5. Fannie Mae portfolio down 14.4 pct in February

NEW YORK, March 22 (Reuters) - Fannie Mae, the largest U.S. home funding company, on Thursday said its retained mortgage portfolio fell by a 14.4 percent annual rate in February.

The company's mortgage portfolio declined to $712.1 billion last month after shrinking by an annualized 4.8 percent in January. The portfolio decreased by a 0.4 percent annual rate for all of last year...>
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070322:MTFH67845_2007-03-22_21-56-02_N22390320&type=comktNews&rpc=44