Mortgage & Loan: The Bane Of Subprime Lending

The New York Times covered the increasing pain of homeowners with subprime loans yesterday. It's funny to watch the author strain to reassure his readership that this isn't a sign of a nationwide housing slump, and it'll only affect "those" people.

But the truth is that the failing subprime market affects everyone, and investors are getting exceedingly nervous:

Based on current performance, 2006 is on track to be one of the worst ever for subprime loans, according to UBS AG, it said. It cited the bank saying that roughly 80,000 subprime borrowers who took out mortgages packaged into securities this year are behind on their payments.

Not only that, subprime shysters such as Ownit are going out of business, and attempts to sell other subprime units are going more slowly than expected.

This is what happens when you bank the success of an entire industry on gouging consumers because they've had poor credit histories, using astronomical interest rates and predatory terms, and specifically targeted at minorities and women. Eventually, all of that bad karma is going to come back and haunt you.

Posted at December 7, 2006 11:12 AM

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The New York Times covered the increasing pain of homeowners with subprime loans yesterday. It's funny to watch the author strain to reassure his readership that this isn't a sign of a nationwide housing slump, and it'll only affect "those" people. But the truth is that the failing subprime market affects everyone, and investors are getting exceedingly nervous: Based on current performance, 2006 is on track to be one of the worst ever for subprime loans, according to UBS AG, it said. It cited the bank saying that roughly 80,000 subprime borrowers who took out mortgages packaged into securities this year are behind on their payments. Not only that, subprime shysters such as Ownit are going out of business, and attempts to sell other subprime units are going more slowly than expected. This is what happens when you bank the success of an entire industry on gouging consumers because they've had poor credit histories, using astronomical interest rates and predatory terms, and specifically targeted at minorities and women. Eventually, all of that bad karma is going to come back and haunt you.