Job Losses Push Safer Mortgages to Foreclosure

[steven johnson]

Now the liquidity crisis is causing even prudent borrowers problems. This is the collateral damage of the age of 'irrational exuberance.'

By PETER S. GOODMAN and JACK HEALY
Published: May 25, 2009
As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.
In the latest phase of the nation's real estate disaster, the locus of trouble has shifted from subprime loans - those extended to home buyers with troubled credit - to the far more numerous prime loans issued to those with decent financial histories.
With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.
"We're about to have a big problem," said Morris A. Davis, a real estate expert at the University of Wisconsin. "Foreclosures were bad last year? It's going to get worse."
Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers' introductory interest rates expired and were reset higher.


Job Losses Push Safer Mortgages to Foreclosure

[jakeXT]

1. After the consumer dies, some have to strip/dance to pay their mortgages

During the boom years, no place in America boomed more than Las Vegas. But when the economy collapsed, Vegas fell hard. Laura Ling tours the wreckage of Sin City, from unemployed strippers and half-built, abandoned casino projects, to hospitals turning away cancer patients and ambulances, to one of the few remaining boom industries--evicting people.

http://www.youtube.com/watch?v=rFTZ3flsipE