Subprime loans may now be a problem of the past as many have worked their way out the system – the critical area now is prime loans, where defaults are driven by stubbornly high unemployment
Loans that are at least 90 days past due, the largest and most troubled group, fell to 9.11 percent from 9.54 percent in the first quarter, according to the Mortgage Bankers Association
The number of newly distressed borrowers increased, raising the prospect that foreclosures and delinquencies could resume their rise.
14.4% of borrowers had missed at least one payment or were in foreclosure at the end of June
While the mortgage crisis was driven at first by adjustable-rate mortgages that reset to higher payments, the majority of deteriorating loans are now being driven by unemployment.
This month the administration announced a new round of $3 billion in funding for state initiatives that will offer bridge loans to help jobless homeowners make their mortgage payments
Standard & Poor's Ratings Services downgraded $5.64 billion in collateralized debt obligations because of deteriorating credit and recent downgrades on subprime residential mortgage-backed securities
S&P has lowered its ratings on hundreds of billions of dollars' worth of CDOs and RMBSs as the loans in them continue to sour
Last month, S&P warned of severe declines in credit and increases in defaults in the pools underlying trust-preferred CDOs.
