40% of subprime loans could default!
According to current economic assumptions, an estimated 40% of outstanding supbrime mortgages could go into default over the next three years says Michael Bykhovsky, president of Applied Analytics. American Progress additionally reports that 14.7% of nationally-originated loans in 2007 were subprime in nature, meaning that the potential fallout from a mass subprime exodus could be huge - up to 5.88% of all homes in America could end up in Default before we reach 2010!
This is very big and very bad news for American homeowners. I have always advocated that subprime mortgages have their place, but I highly doubt nearly 15% of borrowers truly needed them. I have to admit, it makes my industry look pretty bad even though brokers accounted for less than half of these originations; the majority were originated by bankers such as Countrywide (one of the major banks financing homes in Arizona which has been hit hard, WaMu (Formely Long Beach), etc.
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