More Tremors Rock Subprime Mortgage World
More tremors to tell you about in the subprime world. Fitch Ratings downgraded 100 subprime mortgage bonds, citing even more deterioration next year. Now, late payments aren't the only concern affecting the risky sector. CNBC’s Erin Burnett examined whether these "cracks" are going to spread.
Glenn Costello, The Managing Director for Fitch Rating’s Residential Mortgage Group said we've downgraded a number of bonds in the 4th quarter. "Some of the downgrades are technical and some (of the downgrades) come from concern over home price growth slowing and subprime borrowers coming under pressure."
Erin Burnett: Do you expect to see a domino effect?
Glenn Costello: I don't expect that, but there has been a boom in the market over the past few years - we are now in the downside of the market and we do expect to see consolidation."
Erin Burnett: Recently, The Center for Responsible Lendingreleased a study that said 1 in every 5 subprime mortgages will end in foreclosure. Do you agree?
Glenn Costello: I think the statistic is a little on the high side - to see numbers that high you'd have to see more stress on the economy.