Foreclosures soar. Prime borrowers next?

by Chris Sturr | December 07, 2008

According to the latest report by the Mortgage Bankers Association (MBA), 1.35 million homes were in foreclosure in the third quarter of the year, a jump of 73% over a year earlier. Three percent of all homes are now in foreclosure, and another 7% of homeowners are behind on their payments.

With 10% of homeowners now either in foreclosure or behind on their mortgages, unemployment spiking upwards and the recession deepening, the MBA predicts that the number of troubled mortgages will increase, including a larger share of Prime as well as Subprime mortgages.

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  1. The Financial Times noted a disturbing aspect of these trends on Saturday: “While much of the pain in the mortgage markets of states such as California and Florida has continued to centre on building, poor underwriting and incorrect credit pricing, fundamental economic factors have become more important as labour markets have slumped in those states.”Add to this what the FT said in another article:“Labour market data is generally a lagging indicator [Gabriel Stein of Lombard Street Research] said.”

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