| Related Articles: News, All |
Blame Reckless Lendersby Eric Johnson on Apr 23, 2009It’s official: the wave of defaults still sweeping California and the nation is the result of irresponsible lending practices, which peaked in late 2006, according to a just released report. MDA DataQuick, a real estate analyst, reports that three lenders were on the tip of that wave, making a stunning number of loans that have since gone bad. Between 65 percent and 75 percent of the loans made by the three—ResMAE Mortgage, Master Financial and Ownit Mortgage Solutions—have since gone south, DataQuick reports. Between them, the three are responsible for 8,000 loans that have gone bad. They sold almost all of these loans to other banks, which then repackaged them into the now-familiar house-of-cards arrangements that have since collapsed. An analysis in today’s Merc, headlined “Report: Reckless mortgage lending in late 2006 fueled California default wave,” quotes DataQuick's John Karevoll calling mid- to late 2006 a "pocket of nastiness." More than 9 percent of the mortgages originating between August and November 2006 are now in default. That’s almost double the default rate for all loans made in 2005 4.9 percent. In 2004, the default rate was less than 1 percent. "This whole process, at least for a while there, just broke down," Karevoll said. "There was nobody out there minding the store." Merc reporter Sue McAllister makes the point that the DataQuick report “provides grist for those who say the industry needs greater regulation to avoid repeats of the subprime mortgage lending debacle.” According to the Merc, defaults in Santa Clara County jumped 95 percent from the fourth quarter of 2008 to the first quarter of this year: “A total of 4,090 notices were issued in the county in January, February and March.” by Eric Johnson on Apr 23, 2009 |
|
|
|
