{"id":1786,"date":"2007-08-10T16:05:13","date_gmt":"2007-08-10T23:05:13","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1786"},"modified":"2007-08-10T16:05:37","modified_gmt":"2007-08-10T23:05:37","slug":"how-big-is-the-sub-prime-mortgage-market-not-very-big-at-all","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1786\/how-big-is-the-sub-prime-mortgage-market-not-very-big-at-all\/","title":{"rendered":"How Big Is the Sub-Prime Mortgage Market? Not very big at all"},"content":{"rendered":"

Cited by BusinessWeek Online<\/a>, a very eye-opening analysis of the sub-prime mess from National Review Online<\/a>:<\/p>\n

I’ve thought a lot about Rain Man<\/em> over the past few months as I’ve been following the press coverage of the sub-prime mortgage crisis. The story’s been on the front page of the Wall Street Journal<\/em> nearly every day. Pretty much every show on CNBC — except Kudlow & Co.<\/em> and one or two others — has been obsessed with the topic. Yet no one seems to be asking the Rain Man<\/em> question: “How big is the sub-prime mortgage market?”<\/p>\n

And the answer, as Ben Stein makes clear, is not very big at all.<\/p>\n

Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are sub-prime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.<\/p>\n

So, all in all, when you work through the details and get down to the number that really matters, only about 0.6 percent<\/em> of U.S. mortgages are currently in foreclosure. That’s up a hair from roughly 0.5 percent last year. That’s it.<\/em><\/p><\/blockquote>\n

<\/p>\n

Actually, that’s not it. Things are actually better<\/em> than the numbers suggest, since sub-prime-mortgage homes are less expensive than prime-mortgage homes. This makes sense. Wealthier people, generally, can afford costlier homes than less-wealthy people. The recent sub-prime surge brought large numbers of moderate-income families into the home-ownership market, and their houses are less expensive than most. Therefore, the dollar impact of the sub-prime default is smaller than if it were a prime default.<\/p>\n

With approximately 254,000 mortgages in foreclosure at the moment — up from roughly 219,000 last year — the sub-prime meltdown has given us an increase of 35,000 mortgage foreclosures over the last quarter. Since the average sub-prime mortgage clocks in at almost exactly $200,000, we’re looking at an approximate $7 billion increase in foreclosed value in the first quarter of this year.<\/p>\n

Raymond, how big is household net worth in the U.S.? About a hundred dollars?<\/p>\n

Actually, it’s a lot bigger than that — about $53 trillion. In other words, the Read more<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Cited by BusinessWeek Online, a very eye-opening analysis of the sub-prime mess from National Review Online: I’ve thought a lot about Rain Man over the past few months as I’ve been following the press coverage of the sub-prime mortgage crisis. The story’s been on the front page of the Wall Street Journal nearly every day. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26,6,5],"tags":[],"class_list":{"0":"post-1786","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"category-marketing","8":"category-real-estate","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1042,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1042\/is-the-subprime-mortgage-market-the-next-enron\/","url_meta":{"origin":1786,"position":0},"title":"Is the Subprime Mortgage Market the next Enron?","author":"Brian Brady","date":"February 13, 2007","format":false,"excerpt":"An excerpt from one of my recent posts on The Active Rain Real Estate Network: The sub-prime mortgage market is falling apart. Wall Street firms are being stung by the bad sub-prime loans they bought and have demanded that the sub-prime lenders buy those loans back. The sub-prime lenders didn't\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1737,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1737\/ask-the-broker-did-i-invest-in-a-sub-prime-mortgage\/","url_meta":{"origin":1786,"position":1},"title":"Ask the Broker- Did I Invest in a Sub-Prime Mortgage?","author":"Brian Brady","date":"August 3, 2007","format":false,"excerpt":"Scott asks: How can you tell if you have a sub-prime mortgage bond in a portfolio? Scott, I'm taking a stab at this. I haven't sold securities in 14 years. Mortgage-backed securities, in the early 90s, were mostly Ginnie Mae pass-through certificates or Agency-issued pass-throughs and collateralized mortgage obligations (CMOs).\u2026","rel":"","context":"In "Ask the Broker"","block_context":{"text":"Ask the Broker","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ask-the-broker\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":852,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/852\/what-isaac-newton-knew-about-mortgage-lending\/","url_meta":{"origin":1786,"position":2},"title":"What Isaac Newton Knew About Mortgage Lending","author":"Dan Green","date":"January 4, 2007","format":false,"excerpt":"I recently wrote about sub-prime loans for the first time in a long while because the sector should start taking more headlines in the papers. I'd hate for you to be unready for it, of course. Sub-prime loans are a big part of mortgage lending. \"Sub-prime\" is a broad-sweeping term\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9405,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/9405\/reversing-a-trend-or-back-to-the-future\/","url_meta":{"origin":1786,"position":3},"title":"Reversing a Trend Or Back To The Future?","author":"Brian Brady","date":"August 1, 2009","format":false,"excerpt":"If you're considering a reverse mortgage, get it now. The reverse mortgage market is going to blow up as big as the sub-prime market did.\u00a0 This time, like last, it's those \"durned borrowers\" acting differently than the rockets scientists predicted they would.\u00a0 In the sub-prime market, it was assumed that\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2064,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2064\/sub-prime-mortgage-crisis-caused-by-unexpected-success\/","url_meta":{"origin":1786,"position":4},"title":"Sub Prime Mortgage Crisis Caused By Unexpected Success","author":"Brian Brady","date":"October 19, 2007","format":false,"excerpt":"Sub prime mortgage are defaulting at record proportions.\u00a0 Lenders are closing their doors and confidence is waning on Wall Street. Greed, corruption, and irresponsibility have all been cited as the reasons for this contraction and collapse. While these factors might be contributing reasons, they are all byproducts from the underlying\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2355,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2355\/were-all-sub-prime-borrowers-who-consume-oil\/","url_meta":{"origin":1786,"position":5},"title":"We’re All Sub-Prime Borrowers (Who Consume Oil)","author":"Brian Brady","date":"December 12, 2007","format":false,"excerpt":"Residential lending is in a pretty tough spot. Mounting losses, from former white-picket fence owners, are putting a dent in the country club sets' wallets. The problem is not unlike the one we faced 20 years ago; bankers turned into riverboat gamblers. That's all changed. Today, sobriety is the buzzword\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1786"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1786\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}