On July 25, 2007 US stocks slumped the most since March after Countrywide Financial Corporation, which accounts for almost a fifth of US mortgages, said second-quarter net income tumbled 33 per cent. Stocks fell further on July 26th and 27th. But what caught my eye is that Countrywide accounts for 20 percent of the US mortgage market and their profits were down by one-third.
Countrywide, and other lenders, laid part of the blame for the uptick in delinquencies on borrowers with good credit who had taken out prime home equity loans. Other anaylsts say prime mortgages oterh than home equity loans are also effected. And while HSBC’s subprime losses have been widely publicized, lets not forget that many other subprime lenders had greater problems than HSBC.
Many factors effect the equasion, but credit card companies are quick to raise a cardholder’s rate if problems are spotted in one’s credit report. Prime borrowers still have 2 percent fixed rate credit cards, but once those cards go to 19 percent or 29 percent serious problems begin. I contend that credit card companies were aware of potential problems years ago. Credit card companies pushed for new bankruptcy legislation, knowing full well that adjustable rate no-doc fixed payment mortgage loans for $250,000 to cashiers at WalMart, Burger King and 7-11 were not sustainable. It will not be the mortgage companies forcing people into bankruptcy, but rather the credit card companies, collections agents, settlement scammers, high gasoline prices, higher home insurance costs, and the like.
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This article, Subprime Mortgage Blues Spread to Prime Loans, is just one of our articles from our Mortgage Crisis Daily
The Subprime Mortgage Crisis Before, During, and After
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