Light at the End of the Subprime Tunnel

September 7 2007 BusinessWeek.com The Mortgage Bankers Assn.'s new numbers are grim, but the group's chief economist says a recovery, though delayed, is in sight. The increase in foreclosures was concentrated in just four states: California, Florida, Nevada, and Arizona. Those states had big shares of adjustable-rate mortgages, high prices, and lots of home purchases by speculators. "The recent turmoil is likely to postpone the eventual turnaround of the market by about one quarter", says Douglas Duncan, the Mortgage Bankers Assn. chief economist. He now thinks the delinquency rate will peak some time between the end of 2007 and the middle of 2008, with the foreclosure rate peaking one to two quarters after that.

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