Wednesday, July 25, 2007

If You Make a Profit, Then It's All Good, Right?

Ok, one more before I leave on vacation.

The snippet of chart, below, is from The Mess Greenspan Made blog. It shows that notices of default (NOD) in Marin, as reported by DataQuick, are up over 100% from this time last year (yes, not as bad as other, less special counties; although has Marin NODs closer to 150 which would make the percentage closer to 159%) along side the ethnic breakdown of the county according to the 2005 census data. If it is assumed that the NODs are evenly distributed across all ethnic groups (which I think is the safest assumption to make absent other data), then it suggests that the majority of NODs were issued to caucasians (which is what you would expect by chance alone). If so, it suggests that our caucasians have had need of "exotic" mortgages, possibly more than most folks want to admit (don't underestimate the power of making appearances).

Now consider these quotes from today's Chronicle (emphasis mine):
The number of Bay Area homes lost to foreclosure during the second quarter hit the highest level in almost two decades, and the region’s homeowners also received a record-high number of mortgage default notices, according to a report to be released today.

One ominous change is that notices of default increasingly are leading to foreclosure. This year almost half - 45.4 percent - of notices of default resulted in homes being lost to foreclosure. A year ago, only 12 percent of notices of default resulted in foreclosure.
Furthermore, consider that it is now being reluctantly admitted by some that the "subprime woes" are not in fact "contained" to subprime; that the problems infect the "highest quality loans" too. I don't know about you but I think we are entering some "interesting" times.


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