These next two charts, showing that prime mortgages are now the key source of new foreclosures, are shockers. Taken together, they say that prime mortgages are just now beginning to act like subprime mortgages did back in 2007.
Note that prime fixed-rate mortgage foreclosures (red arrow) are now leading subprime adjustable-rate mortgages as the main source of new foreclosure activity.
(Source)
While the rate of prime foreclosures is still well below the rate seen in subprime mortgages, prime mortgages outnumber their risky brethren by nearly seven to one.
The universe of prime mortgages is much larger and, in some ways, more important to the health of our banking system than are subprime mortgages. The reason? They aren’t supposed to fail and were thought to be more dependable and predictable. Plus, there are a whole lot more of them.
So far, all we can say is that the pace of foreclosures has not yet leveled off and that any sort of recovery, or return to growth, is pretty much unthinkable until these statistics flatten out and turn around. Everything else is a statistical mirage, due primarily to government deficit expenditures.
This next article details a few of the issues.
HOUSING: More ‘prime’ borrowers falling behind on mortgages nationwide
WASHINGTON —- With the recession throwing thousands of people out of work daily, more than 13 percent of American homeowners with a mortgage have fallen behind on their payments or are in foreclosure.
by former_user