Big Loans Facing Big Problems – California Prime Jumbo Loan Defaults Rise to 11.3 Percent Putting $167 Billion in Loans in Distress. California Holds 44 Percent of Prime Jumbo Loans and 50 Percent of Option ARMs.
Most Americans will never deal with a jumbo mortgage. With the nationwide median home price of $173,000 a mortgage of $729,750 seems like an absurdity to most people. But in states where housing prices were climbing by leaps and bounds big mortgages were big business. The prime jumbo residential mortgage backed security market is currently [...]
FDIC and the Bank Failures of First Federal Bank and Imperial Capital in California. Two Banks Brought Down by Option ARMs and Commercial Real Estate.
First Federal Bank of California failed on Friday because of a heavy over indulgence on risky option ARMs. Imperial Capital also failed on the same day because of an inability to raise capital and also mounting losses of commercial real estate loans. These two bank failures, two of the 140 in 2009, show that the [...]
The Negative Equity Conundrum: Why Having Equity in a Home is Important. 1 out of 4 Mortgage Holders in a Negative Equity Position.
The post title should be obvious but something occurred during this decade that gave the impression that somehow, equity in a property was of little importance. The last time in our history that we saw this massive amount of negative equity was during the Great Depression. But even then, it was a poor comparison because [...]