28 September 2006

Home-Equity Loss Rate Rises to Most Since 2001

Bloomberg.com: Bonds: "Sept. 27 (Bloomberg) -- The rate of losses on U.S. home- equity loans in June reached its worst level since 2001 because of more foreclosures, Moody's Investors Service said.
The loss rate climbed to 1.05 percent of total loans from 0.8 percent in June 2005, Moody's said in a statement yesterday. The amount of loans with payments more than 60 days late rose to 6.76 percent from 5.86 percent. There were $551.1 billion of securities backed by home-equity loans outstanding at the end of last year, according to the Bond Market Association.
Destruction from Hurricane Katrina in Louisiana, Mississippi and Alabama last year along with layoffs in the Detroit area by carmakers Ford Motor Co. and General Motors Corp. this year have left more people unable to pay bills, said Michael Youngblood, a Friedman Billings Ramsey & Co. analyst.
``We have seen much greater weakness in the rust belt cities than anticipated,'' Youngblood said in an interview today.
The share of mortgages entering foreclosure at the end of June was the highest since the fourth quarter of 2004, according to a Sept. 13 report by the Mortgage Bankers Association in Washington. And prices of existing homes fell last month for the first time in 11 years as sales dipped to the lowest level since early 2004, the National Association of Realtors said yesterday. "

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