No housing bubble popped in Ohio, Michigan
Economy, not speculators and adjustable mortgages, is depressing market
http://www.msnbc.msn.com/id/22300698/![](http://msnbcmedia.msn.com/j/ap/fd1f85c3-f174-42d0-b2fc-e44e5a8d137d.hmedium.jpg)
DETROIT - Michigan and Ohio share something with Florida and California — some of the nation's highest rates of foreclosed homes and delinquent mortgages. But the reasons for their woes are as different as their climates. Battered by a declining manufacturing base, stagnant population growth and low demand for housing, Michigan and Ohio rank No. 1 and 2 on mortgage finance company Fannie Mae's list of states with the largest credit losses through Sept. 30.
Fannie Mae, which finances or guarantees one of every five home loans in the United States, listed losses — loans written off as having no chance of being recovered — of $185 million for Michigan and $101 million for Ohio — two similar states in many respects with strong ties to the auto industry. By contrast, California saw $30 million; Florida, $21 million.
"The underlying economies of Michigan and Ohio are that bad relative to California and Florida," said Doug Duncan, chief economist for the Mortgage Bankers Association. Michigan had the nation's highest unemployment rate in October at 7.7 percent; Ohio's rate was 5.9 percent. Both are above the national rate of 4.7 percent.
And jobs and income are all-important in keeping the housing market alive. Nationwide data from Countrywide Financial Corp., the nation's largest mortgage lender, found the No. 1 reason its customers have been defaulting on mortgage loans is because their income was cut. That accounted for almost 60 percent of its loan defaults in the first 10 months of this year. Once illness and divorce are factored in, cash-flow problems caused 80 percent of mortgage defaults nationwide, according to Countrywide's data; payment adjustments alone accounted for only 2 percent.