Job Losses Push Safer Mortgages to Foreclosure

Posted by Kendall Harmon

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

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Filed under: * Economics, PoliticsEconomyHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--

1 Comments
Posted May 27, 2009 at 5:00 pm [Printer Friendly] [Print w/ comments]



1. chips wrote:

In normal times foreclosurs on homes occur in cases of illness (resulting in job loss), job loss, and death (unisured) of one breadwinner.

May 28, 9:11 am | [comment link]
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