Prime Mortgages Going Bad Too

The refrain of the NAR, and other people pimping for real estate has been that the meltdown will be confined to sub-prime mortgages.

Coffin, meet nail.

Countrywide feels pain of ailing mortgage market - Los Angeles Times
CEO reports that even 'prime' borrowers are having more trouble making payments. Company's second-quarter profit slides 33%.
By Annette Haddad
Times Staff Writer

2:25 PM PDT, July 24, 2007

Shares of Countrywide Financial Corp. tumbled today after the nation's biggest mortgage lender signaled that rising defaults and delinquencies were spreading beyond the troubled sub-prime market to higher-quality "prime" loans.

The Calabasas-based company reported a 33% drop in its second-quarter profit and slashed its outlook for the rest of the year, citing an "increasingly challenging" housing market.

"We expect difficult housing and mortgage market conditions to persist," said Countrywide Chief Executive Angelo Mozilo.

During the quarter ended June 30, softening home prices in many areas of the country caused delinquencies and defaults to rise for Countrywide borrowers with all kinds of mortgages, Mozilo said.

...

People paid more than they could afford for houses because they were afraid that rising prices would lock them out forever, and they paid too much, and got mortgages that were too bkg.