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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Report: Record 12% Of Homeowners Behind In Mortgage, In Foreclosure

A record 12 percent of U.S. homeowners are behind on their mortgage or in foreclosure, an industry report said today, as the housing crisis extends beyond bad-credit borrowers who took out gimmicky, high-risk loans.

According to a report from the Mortgage Bankers Association, the foreclosure rate on prime, fixed-rate loans has doubled over the past year, and has overtaken the sub-primes as the largest share of new foreclosures.

One way to look at this: Most of the risky loans are getting flushed out of the system, which is good.

Another way to look at it: The risky loans have not proven to be the firebreak many hoped they would be. The mortgage wildfire is moving into areas that had been thought fireproof, to extend the metaphor to its (labored) conclusion.

Nearly 6 percent of homeowners with good credit who took out fixed-rate mortgages are now in the foreclosure process, the report said.

And get this: Nearly half -- HALF -- of all homeowners with shaky credit and adjustable-rate loans are past due or in foreclosure.

Also today, the Commerce Department said that sales of new homes ticked up just slightly from March to April, by .3 percent.

But don't get too excited: New home sales are down 34 percent from April of last year.

The median price of a new home now stands at $209,700, down 14.9 percent from April 2008.

-- Frank Ahrens
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By Frank Ahrens  |  May 28, 2009; 10:59 AM ET
Categories:  The Ticker  | Tags: Commerce Department, Mortgage Brokers Association, foreclosure, home prices, home sales  
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Too many good borrowers are affected due to a few things.

1) Many 'upgraded' into houses they couldn't afford. Pretty stupid but it's their own fault. They should have stayed put. In the process they are just as bad off as those that couldn't afford a house to begin with.

2) Others are being affected by the recession due to all the bad credit which caused this mess. Since we gave money (not just mortgage money but credit cards) to anyone, now that the piper is asking to be paid, many companies are shutting down, laying people off, cutting salaries and in the process a lot of those are just normal people caught up in the firestorm.

Credit..what a mess. Time to reign it in.

Posted by: cavatellie | May 28, 2009 1:10 PM | Report abuse

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