Wednesday, June 20, 2007

A housing "bloodbath"!

Warning! This article is pretty depressing.

Bloomberg reports.

1 comment:

justin said...

Bloodbath Pt II;jsessionid=OPXAKKXYVQDL1QFIQMFCFGGAVCBQYIV0?xml=/money/2007/06/26/cnusecon126.xml

Banks 'set to call in a swathe of loans'

Key quotes from story

The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

"Excess liquidity in the global system will be slashed," it said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing."

“There isn’t a recovery about to happen,” said Ara Hovanian, head of the building group Hovanian Enterprise.

The worst of the US property crisis has yet to hit since there is an overhang of $2,000bn ($2 TRILLION)of mortgages with adjustable rates which have yet to be reset.
Many borrowers could see payments jump by half, or even double.

Bloodbath? More like Armegeddon for Alt -A loans, Tsunami for Sub-prime.