Borrowers with good credit fuel foreclosures in 1Q

[Joanne98]

Source: AP

NEW YORK (AP) -- The mortgage crisis is spreading and hitting new heights: Borrowers with good credit now make up the largest share of foreclosures as job losses and pay cuts exact their toll.

A record 12 percent of homeowners with a mortgage were behind on their payments in the first quarter, the Mortgage Bankers Association said Thursday. And the trend is predicted to continue until the end of next year, about six months after unemployment is expected to peak.

The genesis of the recession -- risky adjustable-rate loans made to borrowers with bad credit -- remains a significant factor in foreclosures. Today, almost half of all subprime ARMs are past due or in foreclosure. In Florida, New Jersey and New York the number is above 55 percent.

When those borrowers started defaulting in droves in late 2006, it forced dozens of lenders out of business and sparked a credit crisis in the summer of 2007. Businesses nationwide couldn't get short-term loans to finance new orders or even cover their payrolls. Economic production began shrinking at the end of 2007 in what has become the longest recession in the United States since World War II.

The impact has now filtered out, consuming homeowners who until recently had a good track record of paying their bills on time. Nearly 6 percent of these prime borrowers with fixed-rate mortgages were past due or in foreclosure, nearly doubling in the last year.

"These (borrowers) are the best of the best out there," said real estate analyst Mike Larson with Weiss Research in Jupiter, Fla. "Clearly, borrowers far and wide are getting hit by this."


Read more: http://finance.yahoo.com/news/Borrowers-with-good-credit-apf-15376981.html?sec=topStories&pos=main&asset=&ccode=

[santamargarita]

1. Thanks to the Goddamn Republicans and do nothing Democrats...

most of us are just a job layoff or illness away from being homeless!

[Triana]

2. all the good credit in the world won't pay the mortgage if people don't have JOBS

...which are mostly STILL getting shipped to INDIA, CHINA and MEXICO.

Duh.

This isn't rocket science. All that moolah that was poured onto Wall St is useless unless PEOPLE HAVE JOBS. GOOD jobs.


1 + 1 = ????

(I am not holding my breath waiting for 'guvmint' to get that clue)...

[OhioChick]

12. Bingo!

No Jobs = No Recovery

[SoCalDem]

18. And many of them may be sitting on mortgages of $300K , on a house

now "worth" half that.. It's a sucker's loan, when the "new people" next door have a monthly payment half of theirs..on the same house..

"Ruined" credit at this particular time in history does not have the stigma it once had..

If you are a young couple who overpaid on a house within 2 years or so, you may have none of your own money in the house to start with, and you have lots of time to "repair" your credit.. Out here there are tons of "walkaways"..

[county worker]

3. This recession is the great leveler.

Everyone will have a shitty credit score and will have lost any positive net worth they built up.

In a way I like it that I won't have to read the snarky posts from the sterling credit score folks who have to pay high interest rates like the rest of us.


"I pay off my balance every month and the mean credit card companies are raising my costs! WHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!"


If you can afford to pay of the balance why not use a debit card instead? No we just like to whine!

[Joanne98]

4. LOL

[xchrom]

6. except in the case of people like you.

if you lost your job -- your debit card will save you for endless years.

[county worker]

7. If I lost my job right now my debit card would be useless.

Fortunately the recession hasn't hurt me other than losing all the value in my house. I finally have a buyer and luckily I can sell it and break even.

[xchrom]

9. ...

:applause: you superior person you.

i use my credit cards -- could sell my house and make a lot of money.

[county worker]

10. What's with all the snark shit at DU?

Is life so fucked up you have to go around dumping on people?

[Gormy Cuss]

13. Snark:

"I pay off my balance every month and the mean credit card companies are raising my costs! WHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!"


If you can afford to pay of the balance why not use a debit card instead? No we just like to whine!

You dumped first.


But to address your question in the above, using credit cards and paying off balances monthly is a way of building up reward points with airlines for some and a way of a good credit history with a vendor so that in the event of an unplanned expense the option to charge it and not pay it off in one month is available. A debit card won't do either of these things.

[Dappleganger]

16. That is good news.

We're about to put our home on the market here is FL and we'll be grateful to break even.

[pokercat999]

8. No we just like the American Express Reward Points and

the perks of being a Platinum card member. To top it off, we can't wait for higher interest rates so we can sell all those repo houses that we bought for cash at half price or less to the unwashed masses at full price and we carry back the mortgage at 12% and hope they default so we can repo and resell at 14% APR.
:sarcasm:


I lost my job in Dec 08 my wife in Feb 09 we were within a few days of walking away from our mortgage (we had actually been paying it down by about $1000 extra per month) when my wife got a new contract that will carry us for the next 12 months. We will never again pay down a mortgage by paying extra every month, we will instead put the money (if any) in savings and when we have enough to pay off the mortgage in full we will do that.

[county worker]

11. My wife told me that perks are why people like using credit cards.

The perks up the price of everything on everyone. Using the card costs the vendor and that cost is an additional expense that the vendor would not incur if a debit card was used or cash was paid. So the price of things is raised to cover the cost of the perks to the sterling credit score people.

Really, I am a bit put off by people who come on DU and tell us they have a perfect credit score. It's like a fundie putting Jesus stickers on the back of the SUV. Elitism sucks!

[Jeep789]

14. Exactly, "The price of things is raised to cover the cost

of the perks", the poor subsidize the rich and everyone pretends it is their own fault.

[xchrom]

5. recommend

[progressivebydesign]

15. what isn't said is that many of those are second homes and investment properties.

The foreclosures in our town are mostly investors, flippers, and builders who overbuilt.

[Old Hob]

17. The majority of the foreclosures in my area are due to the auto-industry failure

I have enough cash and liquid assets to pay off my mortgage right now and I'm considering doing it even though it would clean out the bank accounts. There are a lot of things I would like to buy right now but I won't because I know that anybody can find themselves unemployed these days including me. So, my money sits in various FDIC insured conservative type savings account. It won't go into the stock market. It won't go into a new car or boat. It won't go into home improvements. It'll just sit there and cover my ass in a worst case scenario. I only mention this because I suspect many Americans are thinking along these same lines and, to a certain extent, this lack of faith is what's fueling the spiral we're now in.