California Mortgage Holders Still in Trouble
Sunday, September 7th, 2008WASHINGTON - The source of trouble in the mortgage market has shifted from subprime loans made to borrowers with bad credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.The Mortgage Bankers Association said Friday that more than 4million American homeowners with a mortgage - a record 9percent - were either behind on their payments or in foreclosure at the end of June.
“The problem that policy makers and Wall Street once assured us was `contained’ to subprime mortgages has proven to be anything but,” Mike Larson, a real estate analyst with Weiss Research, said in a research note.
As the economy falters and home prices keep falling, concern is building about a second wave of mortgage defaults flooding the market through 2010.
On Friday, the Labor Department said the nation’s unemployment rate shot up to a five-year high of 6.1percent in August.
A drop in income - whether through a lost job, divorce, death of a spouse or health problems - is the No. 1 reason people fall beyond on their mortgages and lose their homes.
But mortgage defaults and foreclosures in many areas, especially California and Florida, can also be blamed on egregious lending practices and rampant speculation by homebuilders and small investors alike.
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