Wow that article is a perfect example of how people bastardize statistics. Correlation != causation, people, say it with me! It's also pretty clueless in general.<p>Stuff like:<p>> But the focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans<p>Yeah, that's because only a small % of all mortgages are subprime! But a <i>huge</i> percentage of subprime mortgages have defaulted, much higher than prime mortgages (as you'd expect).<p>> The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home.<p>You mean the most "correlated" factor. This doesn't imply causation. But of course, if you have to ask <i>which</i> borrowers are most likely to just walk away, it's the ones with <i>nothing</i> more to lose!<p>Such a sad, pointless article. If he is on to anything, you can't even know it because his analysis is so poor.<p>If you really dig this stuff, follow this blog:<p><a href="http://www.fieldcheckgroup.com/blog/" rel="nofollow">http://www.fieldcheckgroup.com/blog/</a>
This is more of an insight into the perverse incentives created by bankruptcy/foreclosure law than it is about the way in which un-hedged systemic risk led to the crisis.<p>Still an interesting article.
No, the only thing that happened is that lots of people bought things they couldn't afford and, unsurprisingly, couldn't pay for them. That's it.<p>It doesn't help at all to blame banks for this. It's readily apparent that if you purchase a house, regardless of the terms, you will eventually need to pay for a house. It's not rocket surgery. The corollary to this is that "if you can't afford a house, don't buy a house." Anybody ignoring that simple fact is likely to run out of money.<p>Many of us realized this, didn't buy things we couldn't afford, and therefore still have money. It's amazing that people would expect to blame some random 3rd party for their own foolishness.<p><a href="http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff" rel="nofollow">http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-...</a>
this guy needs to familiarize himself with Bayes' theorem. I don't know the real numbers, but I would hope and think that the number of prime mortgages that we're given is 10-20 times larger than the number of sub-prime mortgages.<p>So, a better question might be what percent of prime mortgages and what percent of subprime mortgages go into foreclosure. Not what percent of foreclosures comes from prime vs subprime.