March 26, 2007
A Pile of Poorly Underwritten Loans
Key bits from this week’s interview with Sy Jacobs in Barron’s:
“… the train wreck is accelerating and is turning into a contagion. Subprime will bring down mortgage lending, housing and, in turn, the economy and the market … The problems in subprime are not self-contained. It is a pinprick to a larger problem, and it needs to be looked at that way. The notion that subprime home-equity lending is somehow ring-fenced because it is only 12% of total mortgage loans outstanding and won’t affect the rest of the mortgage and housing market is absurd. First of all, subprime lending was over 20% of 2006’s volume … Nearly $700 billion of mortgages reset this year and nearly half of that is subprime … The subprime home-equity market peaked in 2005, and the most popular product from that year was a two-year-fixed, 28-year-floating mortgage. It resets this year … Housing hasn’t bottomed, and it is just getting going to the downside.”
He might know what he’s talking about or he may just be talking his book, who knows?
March 27th, 2007 at 4:56 am
he DEFINITELY knows what he is talking about…
March 27th, 2007 at 7:13 am
I’d be careful. The Economist cover story has struck!
March 27th, 2007 at 7:52 am
Babak: The worst is clearly behind us. ;-)
March 27th, 2007 at 11:40 am
a bit of both.
Great chick pic this weekend by the way - yowza
August 4th, 2007 at 4:30 pm
[…] Whoa, selling from the get-go, went on all day, and really accelerated in the afternoon — not as bad as last Thursday (the 26th) but still looks pretty scary. The homebuilders definitely did not end the week on a positive note and there’s no hammer to get excited about. Looks like Sy Jacobs was right! […]