100 Percent Mortgage - Your Only Choice?

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We at LA Land never tire of The Bubble Debate, and there was some good back and forth over the weekend. Writing for the LATimes opinion section, Slate’s Daniel Gross declared, ‘The (housing) bubble has clearly popped.’ He went on to argue that investment bubbles are good things, because they foster all kinds of innovation (see ‘50-year, interest-only mortgage’).

Taking the other side of the argument -- the ‘there is no bubble’ argument -- is Gary Painter, research director at USC’s Lusk Center for Real Estate. He told OC Register blogger Jon Lansner, ‘there is no reason to expect a sizable decline in home prices.’

I missed this, but Patrick.net did not: Excellent piece of enterprise reporting by OC Register mortgage guru Matt Padila, pointing out the subprime mortgage mess is probably a lot worse than initial reports indicate. Why? For some reason, everyone seems to believe 13% of subprime mortgages are delinquent, which means 87% are performing. Padilla noticed that IndyMac Bancorp CEO Michael Perry says the delinquency number is much higher.

He quotes Perry saying, ‘And so when you see that delinquency number in the press of 13% subprime delinquencies, it’s hugely understated. It is absolutely hugely understated. ... The subprime delinquencies are more like 18, 20, 22% delinquencies and that’s where I think you’re going to see the problems.’

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