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A comment on The Fed now owns nearly 1/3 of all U.S. mortgages. Parent comment

Re:The Fed now owns nearly 1/3 of all U.S. mortgages by boulos on Wednesday September 09, 2020 @01:36AM (#24417543)
Actually, your 25% delinquency rate seems unreasonable. During the financial crisis, the subprime delinquency rate peaked at 26% [1] but the overall (whole US market) rate was just over 9%.

Delinquency is also mostly just about being a leading predictor of foreclosure or some sort of renegotiated payment structure. The same stat suggests that foreclosures overall peaked at just over 2% (but up to 15% subprime) [1 again, but also 2 which is more clear on 2.23%].

So I’d assume something closer to 2-5% foreclosure, depending on your estimates of benefits policy. Even in foreclosure, there’s still recovery (financially).

In fact, Goldman Sachs might even make a profit re-selling the mortgages it bought off of Fannie / Freddie as part of its $1.8B court-mandated “consumer relief” program [3]. It’s unlikely the Fed would be as “good” at this as Goldman, but a likely unwinding strategy would be to sell them to similar investor groups. Either way, not going to $0 :).

[1] https://www.statista.com/statistics/205959/us-mortage-delinq...

[2] https://www.google.com/amp/s/www.statista.com/chart/amp/1546...

[3] https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/a...

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Re:The Fed now owns nearly 1/3 of all U.S. mortgages by throwawayhacka on Wednesday September 09, 2020 @08:08AM (#24420105)
actually, for many metro areas the delinquency rate is reaching 25%+ for FHA loans right now. they're surviving due to the feds preventing foreclosure.

things are a little better in the other classes of loans but not much! if the economy stays weak and jobs dont come back, some metros may well see a housing price decline. Atlanta, Houston and san anton.

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Re:The Fed now owns nearly 1/3 of all U.S. mortgages by boulos on Wednesday September 09, 2020 @12:44PM (#24422871)
Sure, but the parent comment was saying they're worried the Fed will lose all the money. But the Fed is buying things broadly (initially they bought Bond ETFs/funds!), so while some places will be higher, others will be lower.

My guess is that even more than during the financial crisis, people are delinquent but would absolutely pay if they could. Was your housing price decline statement supposed to be about those homes becoming underwater and therefore the buyers walk away / end up in foreclosure?

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