Sub-Prime Collapse Is A Red Flag For Mortgage Market

[Omaha Steve]

http://www.laborradio.org/node/5629

Sub-Prime Collapse Is A Red Flag For Mortgage Market

A bankruptcy filing by one of the country’s largest sub-prime lenders has sent up a red flag in the larger mortgage market. Jesse Russell reports:

New Century Financial was the second largest provider of home loans to high-risk borrowers. On Monday the company filed for bankruptcy, immediately firing 3,200 workers and announcing plans to sell off major assets. Dozens of sub-prime lenders have collapsed in recent months on the heels of a hike in mortgage defaults, but New Century is the largest and the announcement is causing concerns in the industry as a whole. Historically it has been the sub prime market that acts as an early indicator for a market entering recession. Octavio Marenzi, of financial research and consulting firm Celent, told the Associated Press that “New Century’s failure raises a very real risk the problems facing the sub-prime sector will spread into the broader mortgage market.”

[soothsayer]

1. beware the coming non-chattel mortgage (in NV already?)

where the mortgage is tied not to the home but the BUYER. bankruptcy or death will not settle the debt (it will be passed to the heirs). you don't have to pay on it for 3 years, which is why it will replace subprime. nezt stop, debtors prisons and indentured servitude!

[Tellurian]

2. Insurance companys are vying not only for heloc clients

but for high equity low mortgage holders, designated relatively healthy and at low risk of default.

[Greyhound]

3. Couldn't happen to shittier bunch af assholes. Talk about bottom feeders.

And it will spread rapidly because New Century, like all of their contemporaries, doesn't hold any of their paper for more than a few weeks. They write, collect their fees, and dump the crap on other lenders after massaging the numbers.

Sorry for the desperate folks that will lose their jobs, SoCal is still in really bad shape and jobs are scarce.