Subprime mortgage bonds created in the first half of 2007 contain loans that are going delinquent at the fastest rate ever, according to Moody’s Investors Service.
Those 2007 loans were the real junk then, made when most everyone had to know the buyers couldn’t possibly afford them. And what a surprise, the buyers are defaulting. Who could have ever predicted that would happen?
Unfortunately, the real carnage is yet to come. Hundreds of billions of dollars in mortgages will reset next year, which means sharply higher mortgage payments for those homeowners and an increased risk of foreclosure.