Over 1,000,000 Strong and Growing - the U.S. Subprime Debacle Goes Prime

IRVINE,Calif. – Jan. 29, 2008 – RealtyTrac®(realtytrac.com),the leading online marketplace for foreclosure properties, today released year-end data from its 2007 U.S. Foreclosure Market Report,which shows a total of 2,203,295 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,285,873 properties nationwide during the year, up 75percent from 2006. The report also shows that more than 1 percent of all U.S. households were in some stage of foreclosure during the year, up from 0.58 percent in 2006.

Brinkman said that while subprime adjustable-rate mortgages represent 6.0% of the loans outstanding, they represented the lion's share, 39.0%, of the foreclosures started during the first quarter. Prime ARMs represent 15.0% of the loans outstanding and 23.0% of the foreclosures started.

In absolute numbers, there were 195,000 new subprime foreclosures,an increase of 20,000, while there were 117,000 new prime foreclosures, up 29,000 [emphasis mine - Mikasi].

The big trend was the jump in prime foreclosures from last quarter suggest that the subprimecrisis has spread to more reputable paper.

Arizona,California, Florida and Nevada account for a quarter of outstanding homeloans and 42.0% of foreclosure starts, the industry group said. "The magnitude of the problem there is kind of dwarfing developments in the rest of the country," said Brinkmann.

The rise in default among prime and near-prime loans does not bode well for the asset-backed securities they compose. Write-downs related to worse-than-expected performing mortgage-backedsecurities have already cost Wall Street an estimated $250billion.

“The year ended with a monthly increase of 7 percent inDecember, making it the fifth straight month with more than 200,000foreclosure filings reported and giving the fourth quarter thehighest quarterly total we’ve seen since we began issuing ourreport in January 2005,” said James J. Saccacio, chief executiveofficer of RealtyTrac. “It also pushed the foreclosure filing totalfor 2007 well over 2 million. And while filings were up 75 percent,the number of properties in some stage of foreclosure was up 79percent, indicating that some properties may have just entered theinitial stage of foreclosure in 2007 and could  be going throughthe rest of the foreclosure process in 2008 — unless lender andgovernment intervention efforts begin to gain more traction.”