Monosyllabic Pedantry

Wednesday, April 23, 2008

The Mortgage Crisis

John Stossel sheds a little reality on the hysteria.

Here are some good points:

The Mortgage Bankers Association's 2007 fourth-quarter survey reports that foreclosures came to 2.04 percent of all mortgages. Many of those were speculators seeking flip profits rather than homeowners losing a dream house.
During the quarter, only 0.83 percent of homes entered the foreclosure process.

Politicians love a "crisis."
Why? Because "crisis" justifies making big government bigger.

It's why we now have a global warming "crisis" and in previous years we had "crises" over avian flu, the Y2K threat to computers, imaginary cancer spikes caused by pesticides, killer bees flying up from Mexico, and uncontrolled population growth leading to a "Population Bomb" that will bring "riots and mass starvation" by the year 2000.

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  • Everybody loves a crisis. Sheesh! I don't think the government could function without a crisis.

    By Blogger Michele, at 11:38 AM  

  • Tell that to the people in Slavic Village and the rest of Cuyahoga County.

    Likewise, the Times UK (not the NYT, which is trying not to talk about it) broke it down like this on Feb. 24th:


    Number of families with a sub-prime mortgage: 7.2m

    Proportion of sub-prime mortgages in default: 14.4%

    Sub-prime loans outstanding: $1,300 billion

    Sub-prime loans outstanding in 2003: $332 billion

    Percentage increase from 2003: 292%

    Proportion of loans approved without fully documented income: 43%-50%

    Number of sub-prime mortgages that will have their interest rate reset this year: 1.8m

    Typical rise in monthly payment (third year): 30%-50%

    Sub-prime share of all new mortgages in 2006: 28%

    Sub-prime share of all new mortgages in 2003: 8%

    Number of homes not in foreclosure whose value will decline in 2008-9 as sub-prime foreclosures lower the prices of surrounding homes: 45m

    Value of that decline: $233 billion

    In other words, the sub-prime crisis is going to snowball throughout this year, taking all US home values down with it.

    By Blogger Bridgett, at 2:52 PM  

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