NY Fed On Negative Equity Estimates Among Non-Prime Borrowers

The New York Fed on a roll today. This time discussing the nebulous question of how many subprime borrowers have any equity at all in their house. Seeing how the GSEs are going batshit over providing 125% LTV refi options, the Fed could have probably saved $100k in taxpayer money for very unnecessary research and concluded that the answer is "Lots." However, as your money is at work here, it makes sense to at least share the work product.

And, if one were inclined to read the whole paper, the answer is indeed "Lots."

Comments

[Ajas]

"At that time (4/2008) borrowers with junior liens were more than four times as likely to be in negative equity, an incidence that demonstrates the importance of second liens in determining negative equity. However, home prices have dropped markedly since then, placing many more borrowers in negative equity—even those who had made a sizable down-payment or had just a single lien on their property.

Limiting our analysis to the seventeen cities covered by the S&P/Case-Shiller tiered indexes paints a bleaker picture (Table 2). Using this measure of house price changes, we estimate that 47 percent of housing units with nonprime mortgages—nearly 1 million households in these seventeen cities alone—are in a negative equity position."

Wonder who's holding all those seconds?

[Anonymous]

I misread the title to this article. At first glance I thought it said:

"NY Fed On Negative Equity Estimates Among Non-Primate Borrowers"

Freudian slip of the brain?

[percolator]

The usual suspects; BAC, C, WFC and JPM:

http://www.wlmlab.com/top25.asp?ln=lnrersf2

[pigpen]

Don't forget GE - they bring good things to life