Alt-a foreclosures in Santa Rosa

The Santa Rosa Press Democrat noted this weekend that many Alt-a mortgages, a type of variable-rate mortgage sold to people typically better off than subprime borrowers, are now heading into foreclosure in that area. The paper says 18% of Sonoma County mortgages are Alt-a's.

Such loans were a staple of failed Pasadena lender IndyMac Bank. They served people with good credit but without the income or down payment traditionally required for the amounts they borrowed. As their rates reset, many can no longer afford their monthly payments.

As Calculated Risk notes in its analysis of the trend, when these borrowers are foreclosed, it may be harder to find buyers for their mid-range houses than for the bottom-end properties that now dominate the foreclosure market. That's because there are fewer "trade-up" buyers who sell a lower-priced home then buy a more expensive one. Sellers of low-end homes today aren't people moving up, but banks clearing out repossessed inventory.

 "The foreclosure crisis will now be moving up the value chain," CR predicts.

-- Peter Y. Hong

Comments

[Nelcisco]

We thought subprime was bad, wait and see how ugly this one gets.

Unfortunatly in the scheme of things, the business community and society doesn't really care or value low income subpime type of people in general and yet lower income housing & lower income borrowers sent shock wave to the banking industry. Alt-A in my humble option will see a catastrophy in banking that we have not yet seen.

[fezco]

“Our whole goal was to pay less,” Kristi Laron said. “We figured we were going to refinance again. Who knew what was going to happen.”

You gambled, you lost.... now move out.

[srla]

This is very, very old news to anyone who reads the financial blogs (an actual source of economic research and analysis, in contrast to the industry spin that passes for reporting these days at the Times and other major U.S. papers).

The true shocker, as reported by Dr. Housing Bubble on his blog last week, is the now huge number of PRIME loans going into default - as if the coming waves of alt-a and option arm recasts weren't bad enough.

Seems that the smaller papers are waking up to the magnitude of the coming wave of the housing crisis, which means this info will soon be on the Drudge Report, which in turn means that it will eventually show up in the Times and elsewhere in the guise of investigative reporting. These crack "reporters will repeat their mantra of late, "who could have seen THIS coming?" Clearly nobody in the mainstream media. Yeesh.

[MyLessThanPrimeBeef]

Whatever happened to the rich Germans and other Europeans coming in to the rescue??? The unemployment rate in the Euro Zone is only 9.2%.

[problemwithcaring]

Whatever happened to the rich Germans and other Europeans coming in to the rescue??? The unemployment rate in the Euro Zone is only 9.2%.

You still remember that?? In society's new Twitter dichotomy - once a status message is gone, its forgotten - people would kindly expect you to move on MyLess...stop looking in the past. Read Drew's comments for the latest rational against your doom and glooming forecast.