Subprime Mortgage Meltdown

The subprime mortagge market is in meltdown mode. Today, New Century, who in 2Q 2006 was the third largest subprime lender file for bankrupcty. Responding to the subprime mess, David Lereah declared "It's problematic, but not catastrophic." Bloomberg reported:

Sales of bonds backed by subprime mortgages are tumbling as investors and bankers, concerned about rising delinquency rates, pull back from what had been one of Wall Street's fastest growing businesses.

About $79.3 billion of securities backed mainly by loans to people with poor credit or high amounts of debt were issued this year, down 37 percent from $125 billion in the same period last year, according to a March 30 Citigroup Inc. report.

The subprime meltdown is already being felt across the nation. Once the spring / summer buying season has flopped, and we head into fall, the market will undergo a sharper decline.

P.S. The national foreclosure rate is about to increase dramatically as a big wave of ARMs reset and the economy falters.