The tip of the proverbial iceberg
This reporting from Business Week's blogs points out some interesting data from Standard & Poor's.
Excerpted from BusinessWeek.com
January 25, 2007 The Mighty Mortgage Machine Chris PalmeriA recent report from Standard & Poors, the debt rating agency owned by BusinessWeek's parent
company McGraw-Hill, shows the shifting nature of the mortgage market. Higher interest rates and a cooling housing market have forced some mortage companies out of business (Ownit, MLN, Sebring Capital) and others to put themselves up for sale (Option One, Ameriquest). Defaults are up, particularly in the most risky category--borrowers who took out "piggy back" second loans with lenders that didn't require the normal level of loan documentation.
Consumers are still buying houses and refinancing existing mortgages in numbers that would have seem unthinkable a few years back though. That's good for the Wall Street firms that package and sell mortgage-backed bonds. S&P estimates that the volume of mortgage-backed securities will decline 10-15% this year. That would put it at a level of $900 billion or so--the third best year ever. In 2003, only $586 billion mortage backed securities were sold. Homeowners and potential buyers should be thankful there's still a lot of liquidity in the mortgage market.
