home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Nonprime and Subprime News | Subprime Statistics
Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.

Tough Subprime Outlook

FBR analyst talks about 2007

December 15, 2006


photo of Patrick Crowley
Poor loan performance, payment shock among adjustable rate mortgage borrowers and a growing weakness in the West Coast job market are fueling what could turn out to be a potentially rough 2007 for subprime lenders, according to a mortgage industry analyst.

"We are seeing significantly worse performance of loans originated in 2006 than we have of loans at similar stages originated in prior years," Michael Youngblood of Friedman, Billings, Ramsey & Co. told MortgageDaily.com.

Lenders have been engaged in a battle for market share and began making loans that may now come back to haunt them, he said.

"We think that lenders liberalized their underwriting practices in 2006 in order to rebuild the battered profitability of 2005 both by seeking higher mortgage rates and higher origination volumes," Youngblood said. "But they could only entice (borrowers) by offering lower mortgage rates.

"Unfortunately, building volume with lower mortgage rates and higher FICO scores while the (Federal Reserve) is tightening monetary policy and raising (interest) rates squeezes profitability, and squeezes it hard," he said.

The industry is also bracing for next year when $266 billion of ARMs begin to reset, resulting in higher payments for borrowers.

The situation could prove to be even graver given the small growth in wages for many workers.

"We are deeply concerned about the ability of borrowers to make their newly reset mortgage payments," he said.

"We fear that many borrowers will not have enjoyed income gains equal to potential increases in mortgage payments," Youngblood said. "That's what sticker shock is all about."

Youngblood said the situation comes against a backdrop of slowing rates of appreciation and falling house prices in 28 metropolitan areas.

"The equity cushion for these borrowers is not as great as they might have experienced," he said. "That will further crimp their ability to refinance these loans."

The subprime industry is also "deeply concerned" about the growing weakness in the West Coast labor market. For the first time in a decade employment growth in Washington, Oregon and California is less than the national average, Youngblood said.

"Multiple sectors are affected," he said. "Retail, mining, natural resources, government ... white and blue collar workers.

"Weakness of employment is a pre-cursor to weakness in credit performance," Youngblood said. "The implication is not merely in subprime but in mortgage lending generally from falling employment in these states that is quite substantial and significant."

Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders