FBR: Defaults worse now than during the 2001 recession
I'm certainly not surprised by this. I've been saying for months and months that the subprime lending industry was in serious trouble. The industry tried to keep the boom going in 2004, 2005, and 2006 by progressively slashing lending standards more and more. Then you've got the problem of shoddy/fraudulent appraisals, overstated incomes, a slumping housing market, and more.
Moreover, this is happening DESPITE stronger-than expected economic growth (per the latest GDP stats) and the lowest unemployment rates we've seen in five years. According to the black box, "expert" models, that "can't" happen. But it is.
I'm not saying this is the end of the world or anything. But I am saying that you can't have the biggest housing bubble in the history of the U.S. ... and hand out mortgages on the easiest terms in history ... without expecting any fallout when the bubble bursts. Lots of people who should never have owned homes or gotten mortgages in the first place are going to have their financial lives ruined by foreclosure. And lots of investors in this junk mortgage paper are going to lose lots of money. Period. End of story.