Mortgage Crisis Spreads Past Subprime Loans

[Joanne98]

By Vikas Bajaj and Louise Story
The New York Times

Tuesday 12 February 2008

The credit crisis is no longer just a subprime mortgage problem.

As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists.

The rise in prime delinquencies, while less severe than the one in the subprime market, nonetheless poses a threat to the battered housing market and weakening economy, which some specialists say is in a recession or headed for one.

Until recently, people with good credit, who tend to pay their bills on time and manage their finances well, were viewed as a bulwark against the economic strains posed by rising defaults among borrowers with blemished, or subprime, credit.
http://apatriotsmanifest.com/feb08/economy08021201.html

[Divernan]

1. This has been the case for the past year! Took MSM long enough to report it.

You don't need too many brain cells to figure out that if people with subprime mortgages are forced out of their homes, that the housing prices for the whole area plummets! That falling tide carries with it ALL the home values in the neighborhood, including those people who have traditional mortgages or have paid off their mortgages completely.

So those people, who may have to move because of employment reasons, or who retire and planned to move at that point, or die and heirs have to sell the home, are lucky to sell their homes at any price. If a neighborhood has 20 or 30 percent empty homes, it looks like shit with overgrown yards and for sale signs in all directions. Communities can't afford to keep up with infrastructure/street maintenance and that also makes a neighborhood look very bad. People with standard mortgages, who bought houses to LIVE in, not to flip for quick profits, see values drop up to 40%.

My 39 year old friend in Ft. Myers bought a townhouse (her first home) for $240,000, with a 20 percent down conventional mortgage. Then her office closed and she had to relocate out of state. The last sale in her Ft. Myers block was for $140,000. So she faces not only losing her 20% down payment, but having to come up with another $50,000 to pay off the mortgage PLUS 6-7% realtors' fee. She talked to a bankruptcy attorney. Under Bush's new bankruptcy code, since she is still employed, the formula works out that she can "take bankruptcy" if she agreed to pay something like $2,000 a month for 10 years (after giving up title to the house). That's more per month than she was paying for mortgage, taxes and insurance! Insane!

[Joanne98]

2. If you think you're mad now, read this...

But take you're blood pressure medicine first!
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x337789

[TalkAgain]

3. Sad to watch...nt