Prime Jumbo Loan Defaults Hit New High.

Fitch Rates of Business Wire reported that all prime jumbo loans performance continued to weaken in January for the 32ND consecutive month to all time delinquencies level of 10%. The loans originally began to default in 2007 but by 2009 the numbers had more than tripled. Florida and California were the hardest hit states and the top five default states account for more than 2/3's of all jumbo mortgages.

California, New York, Florida, Virginia and New Jersey were the top 5 states and California alone accounts for 44% of the market, and 11.3% of it's loans going delinquent. Like the conventional loans this is a real concern for banks as wealthier clients start to look at their loans as business decisions, their rate of defaults will definitely rise, the question is by how much? Jumbo loans are roughly between $500,000 to $2,000,000 so the losses will be much higher per default and will add more pressure on the banks. Luxury homes making up the majority of all jumbo loans have been declining steadily in value over the last 2 1/2 years. A 30% decline in values on a $2,000,000 property is a $600,000 loss on the loan. Big numbers and big headaches are definitely ahead for banks. Does anyone have an aspirin?

Contrary to belief that the loans defaulting were sub prime borrowers this is in stark contrast to this is the triple A rated top shelf borrowers going delinquent. It's just more news that markets still are in serious trouble with virtually all mortgage delinquencies across the board rising, this is not just a sub prime mess anymore. This is a house of cards and it is going come tumbling down really soon.