The sky is not falling
During yesterday's wild day on Wall Street, I noticed a chart shown on CNBC that showed the mortgage problem was not as bad as the media seemed to make it out to be. While delinquencies on mortgages have increased and foreclosures are rising, not every homeowner is late with their mortgage payment and not every house will soon be foreclosed.
And not every loan is a subprime loan.
There are problems on Wall Street, credit is squeezed, markets are illiquid, no one can seem to put a value on assets and everyone is avoiding risk like the plague. I personally don't know enough about derivatives and leverage to intelligently discuss these concepts. All of the above are the reasons given for Wall Street's recent volatility.
I do know a little something about mortgages.
I know a lot more about Charleston South Carolina real estate. 
Well, search as I did, I couldn't come up with the CNBC chart on their website or anywhere else. Effectively, it showed that subprime mortgages delinquencies increased from 8% to 16% in the past year. Alt A mortgages (better credit risk but no documentation loans) delinquencies increased from 2% to 4% in the past year. Finally, conforming and non conforming loans (full documentation, loan value under and over $417,000) had a slight increase in delinquency rates but were still less than 1%.
I did find a very illustrative and informative chart from Jerry Bowyer writing on National Review Online regarding the size of the subprime mortgage market. It's much smaller than you might think considering the amount of coverage it is getting and the anxiety it is causing.
Some highlights:
Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are sub-prime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.
So, all in all, when you work through the details and get down to the number that really matters, only about 0.6 percent of U.S. mortgages are currently in foreclosure. That’s up a hair from roughly 0.5 percent last year. That’s it.
With approximately 254,000 mortgages in foreclosure at the moment — up from roughly 219,000 last year — the sub-prime meltdown has given us an increase of 35,000 mortgage foreclosures over the last quarter. Since the average sub-prime mortgage clocks in at almost exactly $200,000, we’re looking at an approximate $7 billion increase in foreclosed value in the first quarter of this year.
In other words, the recent increase in sub-prime foreclosures amounts to 0.01 percent of net U.S. household wealth.
Please read the entire article with a clever Rain Man analogy.