Sunday, January 18, 2009

WaPo: Foreclosure Knows No Class or Income Boundaries

Our previous post was about saving cash with a Refi, which is great if a homeowner can qualify. But we move to the opposite end of the spectrum again, as we here note an article in Saturday's WaPo. It's part of an ongoing series entitled The Crash / What Went Wrong. What to do about the still-growing numbers of defaults and foreclosures will be a significant concern of the Obama Administration, especially as banks keep needing government bailouts.

The WaPo article, "The Growing Foreclosure Crisis," tells us:

"....interviews and a Washington Post analysis of available data show that the foreclosure crisis knows no class or income boundaries. Many borrowers ensnared in the evolving mortgage mess do not fit neatly into the stereotypes that surfaced by early 2007 when delinquency rates shot up. They don't have subprime loans, the lending industry's jargon for the higher-rate mortgages made to borrowers with shaky credit or without enough cash for a down payment.

In October 2008, for the first time, the number of prime mortgages in delinquency exceeded the subprime loans in danger of default, according to The Post's analysis.

One of every five mortgage holders now has a home worth less than the mortgage on it, according to First American CoreLogic, a firm that tracks mortgages and provided data for The Post's analysis.

The article notes that a couple of DC suburbs are significantly affected by the "Prime" foreclosures, including Prince William County, VA.

The story tracks a family that just a couple of years ago "...bought a $1.16 million Mediterranean-style house in an upscale Southern California neighborhood [and] were not cash-strapped, debt-ridden or credit-impaired." But now they are.

Did we read that right? One in five homeowners now has a home worth less than the mortgage on it!

Read the article here.


Anonymous said...

That realtor McGowan has company.

Anonymous said...

This description makes sense for this area. Seems like it's the Early Cycle Home Buyers, the ones who bought in the past ten years, that are putting properties on the market at the insane markups. then all the other listings follow these high prices.
This market is going to fall really hard. Amateur observation. Can't see how any other outcome is possible.