According to the Mortgage Lender Implode-o-Meter Website, 21 of the top 25 sub-prime lenders have closed their doors or gone out of business since december 2006.
According to various sources, 25% of all borrowers last year were sub-prime and another 25% were speculators(or atleast people who can afford a 2nd home, investors and some speculators). Assuming minimum overlap between the 2 groups, that means only 50% of the loans last year went to homeowners who could actually afford them! Okay, thats a bit of a stretch but no wonder the sub-prime lenders are doing poorly.
WAMU was smart to sell its sub-prime portfolio to a french pension fund and HSBC who paid $8 billion for a sub-prime lending company and is now putting aside another $9 billion for bad loans wasn’t.