Let me just quote the first few words of this Bloomberg article "Home prices dropped the most on record in the fourth quarter . . ." I think I need to add no more, but I will. This year there are a lot of Alt-A loans - the level between prime and subprime basically - that are coming under pressure. These include a number of option ARMs, which are basically adjustable rate mortgages that were designed for a niche market that were marketed much more broadly. The option gave the borrower an option on what they wanted to pay, often including a choice to pay less than even just the interest on the mortgage. And even those that chose options that paid off interest have seen their homes go under water, i.e. worth less than the mortgage. The same is still happening on the subprime front and increasingly becoming a problem on the prime front. So a record decline is no surprise and these records are likely to continue this year and a bit into next year, judging from ARM reset dates.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY8hiszeIlbU&refer=home
Me Smell Something Bad
Here is a very enjoyable letter from the NY Attorney General about the bonuses at Merrill Lynch and their dealings with BofA. Seems the $4 billion in bonuses paid for by taxpayers is earning some attention. I liked his father as governor when I lived in NY and I like this move by Andrew Cuomo. I hope he nails the bastards (pardon the french) to the wall. These arrogant jerks need to be in jail or bankrupt, either one is fine for me. I hope he does not give up on this endeavor. If only Obama's people would take up this charge. I voted for Obama, and still think he is a better choice than McCain, but I am so far sorely disappointed. I expected more.
http://beacheconomist.com/CuomoMerrillLetter02-10-2009.pdf
Disclosures: None
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