Here’s the scary part:
“Prime fixed-rate home loans to the most creditworthy borrowers accounted for the biggest share of new foreclosures at 29 percent, MBA said, a sign job losses are hurting homeowners.”
Its not just job losses, people are simply walking away because the banks won’t negotiate. A bank would rather take a huge loss on a home than negotiate with a creditworthy borrower who has lost in some cases 70% of their homes value. The bank will however negotiate with people who have no history of paying their bills….this kind of behavior can only be rewarded for so long without consequences, we are starting to see those consequences.
This is where Mark-to-Market rules actually hurt as the homeowner is ignored while their loan is carried at something close to 100% of the value on the banks books.
Get used to these headlines.
Scott Dauenhauer CFP, MSFP, AIF