2007 Mortgages Failing at Triple the Rate of 2006

Prime loans made in early 2007 are going bad at triple the rate of 2006 loans
By Jim O'Neill,  Newser User
Posted Aug 7, 2008 9:29 AM CDT
Graphic shows weekly change in the number of home mortgage loan applications.   (AP Photo)
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(Newser) – Mortgages procured in 2007 are souring at a rate nearly triple that of 2006, reports the Wall Street Journal, suggesting that the wallop to the financial system from forclosures could be far from over. Analysis done for the paper finds 0.91% of the prime loans issued in the first part of the year in foreclosure, or more than 90 days past due, after 12 months. Just 0.33% of loans made during early 2006 went bad after a year.

Freddie Mac showed an even sharper increase in delinquencies in the 2007-vintage loans it purchased, the Journal adds—a rate of 1.38% compared to .38% of 2006 loans. Questionable business practices may be a factor in the increase, one analyst says, as mortgage brokers riding the housing boom "realized the game was completely over" and pushed iffy mortgages out the door.