From the Record:
N.J. subprime woes worse than nation’s
The Federal Reserve Bank of New York issued a report Friday that sheds light on the condition of subprime mortgages in New Jersey, and it’s not a pretty picture.
Nine percent of more than 63,000 securitized adjustable rate subprime loans in the state were in foreclosure in August, according to the first-of-its kind report to track the condition of loans given to non-prime borrowers in New York and New Jersey.
Being in foreclosure means that lenders had initiated steps to repossess the property.
Nine percent of 63,000 loans represents about 5,670 homes in foreclosure.
The Fed estimates that securitized subprime loans include about 75 percent of all subprime loans. Securitized means bundled together and resold to investors as mortgage-backed securities.
Payments on only 67 percent of the loans — which totaled $16.5 billion in outstanding balances — were up-to-date.
“More than 30 percent in arrears is a striking number,” said Keith Gumbinger, vice president of HSH Associates in Pompton Plains, a publisher of financial information.
I had a look at the NY Fed data about the status of NJ mortgage market. It seems to say that combined LTV in NJ is 93%. Does that mean NJ homeowners only have a combined 7% equity in their homes (this is just for fixed-rate mortgages. The figure was less for ARMs and subprime). Seems incredibly low.
So basically if that’s correct and home prices fall 10% in NJ in 2008, which seems likely, it wipes out all equity in the state.
#1..you are probably correct. I addition most of the homeowners have been using their homes as a credit card with high interest rate. If we should calculate avg, HEL I wander what the avg. loss would be?
Keep in mind for most part homes in NJ have grown approximately 15-25% yearly in value in past 8 years.
That’s pretty crappy is avg equity is only 7%, but remember it’s an “average.” That number probalby doesn’t include all of the people taht own their homes outright. Still, it should include 60 yr olds that are almost done with the mortgage and have 95% equity.