Dr. Housing Bubble 09/09/09

$1.1 Trillion in Toxic Loans: $908 Billion in Interest Only and $198 Billion in Option ARMs. The Zombie Loans that Simply Don’t Die.

Two years of a deep and prolonged recession and we still can’t seem to get a hold of the toxic assets plaguing the books of banks. Much of this comes from the scamming and blood sucking from banks on the taxpayer. How can $13 trillion in backstops and commitments not resolve the problem? First, the banking system operates as a crony operation looking to serve its own interest even if it comes at the detriment of the entire economy. News coming out this week simply reaffirms what we have been saying for the entire year. The Alt-A and option ARM wave is imploding right on schedule.

When I wrote about the Alt-A loans back in May of this year, we put a ballpark figure of $1 trillion for toxic mortgages. So after all the gimmicks and money being thrown at the system it turns out that we still have over $1 trillion in junk mortgages. A recent analysis by First American CoreLogic put the amount of Interest Only mortgages at $908 billion with 2.8 million loans active. Fitch Ratings came out this week showing that there are still $189 billion in option ARMs in the system. For all you folks who thought that all the option ARMs were modified, the data shows only 3.5 percent of the nearly 1 million loans have been modified. And those that have been modified still re-default at incredibly high rates.

So let us put this into perspective with current data:



http://www.doctorhousingbubble.com/1-1-trillion-in-toxic-loans-908-billion-in-interest-only-and-198-billion-in-option-arms-the-zombie-loans-that-simply-dont-die/

I'm pretty sure the White House still has checks in the old check book, so no problem. :sarcasm: