Record foreclosures hit mortgage lenders
This story is from USA Today and is related to an earlier blog entry on spiraling mortgage foreclosures. The reason it caught my eye is that no-where in the article does it mention that the top two states where foreclosures occurred are Mississippi and Louisiana, the two states most recently hit – and hit hard – by hurricanes. And the reason people are failing to continue mortgage payments are that in some cases, the houses no longer exist and either they had no insurance, or the insurance company found a way NOT to pay up.
This is a big story – the record foreclosures – and evidence how in every society, when borrowing money becomes too easy, people get hurt.
It is an equally big story when the insurance companies don’t pay up. I have been told by the company insuring my Florida house that they will probably not continue insuring me. It is hard to find a company who will insure your house against hurricane damage in Florida.
By Noelle Knox, USA TODAY
The reason many mortgage lenders are in trouble became alarmingly clear Tuesday. The Mortgage Bankers Association said more than 2.1 million Americans with a home loan missed at least one payment at the end of last year — and the rate of new foreclosures hit a record.
The problem is most severe for borrowers with scuffed credit and adjustable-rate mortgages. More than 14% of them were behind on their payments. And the worst is yet to come, the MBA said. At least $300 billion in subprime ARMs will reset this year to higher interest rates. Those borrowers face higher payments and a harder time refinancing.
Blindsided by the number of loans that have already gone bad, more than two dozen lenders have gone out of business or been purchased. New Century Financial, the nation’s second-largest subprime lender, has quit making loans and is edging toward bankruptcy protection.
“There’s been a stunning erosion of mortgage quality,” said Mark Zandi, chief economist at Moody’s Economy.com. “It’s primarily in the subprime market, but the entire market is weakening … and that adds to problems in the housing market, and by extension the broader economy.” Retailers are already feeling the effect, he said, because homeowners tend to spend less when they fear their homes are worth less.
To stem their losses, lenders are ending 100% financing plans, requiring better credit scores and demanding more proof of a borrower’s income. The stricter rules are squeezing first-time buyers, as well as homeowners who want to refinance.
To read the rest of the story, and to see a state-by-state list of mortgage foreclosures, Click USA Today, here.
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i heard one of warren buffetts insurance companies will do hurricane insurance in florida. apparently they were one of the few who were willing to insure after the huricanes in new orleans and florida.
heres a link to his company’s companies:
http://www.berkshirehathaway.com/subs/sublinks.html
i’m not exactly sure which one it is but you might recognise one of the names.
GREAT info, thanks Skunk! I will check it out.
if more people stop paying, what do think is going to happen?
We n Kuwait have the same problem of easy bank loans. these loans usually span over 10-20 years. a lot of people take these loans and squander them over consumable stuff. then end up paying most of their income over most of their remaining productive life.
i see that the governments are to blame since they regulate loans and mortages.offcourse these regulations are designed to pump cash through economies to give the impression of a booming economy also its a money sifon for the big finantial institutions (both banks and insuranse institusions)… the regular smiths’ and jones’ are totally not in he picture of these regulatoins.
at the end i think somethings’ gotta give .. both here and in the US and A (ala Borat) !!
how are governments to blame, especially here in kuwait when as you say people will go an squander loans on consumables? surely its not the governments job to tell you when youre being silly.
i will give you this tho, banks should have started a credit rating system here a long time ago, but since approximately 90% of the population will be blacklisted i dont think thats really gonna get off the ground. kinda like the whole DNA testing controversy.
You bring up some good points in regards to mortgage lenders. The more informed we are the better.
Here is my site with a few mortgage tips as well.
Very interesting post, thanks.
[…] Record foreclosures hit mortgage lenders « Here There and Everywhere Here There and Everywhere Xpat, currently living in Kuwait Home About Intlxpatr Record foreclosures hit mortgage lenders This story is from USA Today and is related to an earlier blog entry on spiraling mortgage foreclosures. The reason it caught my eye i […]
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