The U.S. housing market continued to deteriorate in the third quarter as even the most credit-worthy borrowers increasingly fell behind on their mortgages, highlighting the problems policy makers have faced in trying to address the problem.
A new report from the Office of Thrift Supervision and Office of the Comptroller of the Currency found that the percentage of current and performing mortgages dropped for the sixth consecutive quarter, as foreclosures in process topped 1 million mortgages at the end of September. The report covers roughly 34 million loans totaling $6 trillion in principal balances, or approximately 65% of the U.S. mortgage market.
The regulators said that serious delinquencies, loans that are at least 60 days past due, increased across all loan categories and climbed to 6.2% of the loans in the portfolio during the third quarter. The report said that just 67.7% of option adjustable-rate mortgages were considered current at the end of the third quarter, while 27.9% were either seriously delinquent or in the process of foreclosure.
The most troubling finding was that even borrowers considered “prime,” or the least risky, increasingly can’t pay their loans. The report said that 3.6% of prime mortgages were more than two months behind on payments, more than double from a year ago.
Source link: http://blog.mises.org/11296/after-1-trillion-reality-wont-conform/
After $1 trillion, reality won’t conform
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I don’t believe the Federal Reserve should exist, but in the short-term, I think the Fed Chairman should raise interest rates a bit, Volcker-style.
It’s highly unpopular, but it’s a step in the right direction.
Given that so far the irresponsible borrowers have gotten perks and had some of their debt erased, while the responsible borrowers haven’t gotten anything, it’s clear that even a responsible borrower should give more priority to other needs than paying off his debt, since he will be better off. Why waste money keeping current on a mortgage when that will make you ineligible for perks?
“Office of Thrift Supervision”?
Are you shitting me?
I can’t wait for this government to collapse.
Off topic: John McCain was on Mike and Mike in the Morning on ESPN2 this morning. While discussing the BCS issue, McCain described himself as a “Conservative/libertarian.” I spit out my coffee, nearly choking in disbelief.
@Thomas Schiro:
Instead of suggesting more or less interest rates, how about if they leave the Interest rates to be determined by the markets.
Sure its going to rise considerably(thus doing the same thing as suggested) but it will not screw up the economy like Volcker did. One Federal Reserve policy of keeping interest rates artificially too low is no less disastrous than another Federal Reserve policy of keeping interest rates artificially too high.
Imagine if you had suggested fixing price of milk to be raised to $5 per gallon, because the government fixed the price to $1 per gallon which resulted in massive shortage of milk. Do you think either of the policies would work?
Interest rate is the price of the capital. Fixing the interest rate will lead to same disastrous effects of overproduction and underproduction of capital(busts and booms) as in any other commodity whose prices are being fixed.
“the Office of Thrift Supervision”
That sounds so scary, so Orwellian. So the government wants to supervise thrift ???
Must I conclude that the government is devoting an entire office for the sole purpose of trying to curtail thrift and force individuals to spend instead of saving ?
Is the USA fighting a war on thrift ?
http://www.ots.treas.gov/
Oh my gosh, this is for real. There really is an office of thrift supervision.
But apparently, by reading it’s “about” section, I conclude that it’s just another regulatory entity that wants to make sure that savings associations are not fleecing their members nor that they are laundering money or evading taxes.
For a minute, I thought that the OTS was a government effort to force people to spend.
But the real anti-thrift entity is the FED. By printing money and causing inflation, they are really destroying our savings and so we are forced to either spend or invest.
Why Is Laissez-Faire Moral?
Reality won’t conform – nor is it known!
Since reality – as far as we can understand – is only a reflection of human action and human action is subjective, it is always unknown.
No matter how much someone who is ego-driven desires to interpret or intervene, reality cannot be grasped. There is no moral authority to do anything which is why laissez-faire is moral!
Slim934 says
“I can’t wait for this government to collapse.”
Well, it won’t for a long, long time. And if it does happen to in the short run, it would be in a catastrophically bad manner.
In which case we’d remember why “anarchy” has the negative connotation it does. There would not be a peaceful transition to anarcho-capitalism… of that much we can be sure.
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