Saturday, January 17, 2009

Foreclosure crisis really hits prime borrowers hard, too


Dina ElHoghdady and Sarah Cohen have a front page story in the Saturday Jan 18 Washington Post that corrects a common misperception of the foreclosure crisis. The title is “The Growing Foreclosure Crisis” (part of a series: “The Crash: What Went Wrong”) and the link is here.

Consider this table, in millions

Category, Mortgages, Delinquent, Percent:
Total:____55.9,______3.88,______100%;
Prime:___46.9,______1.68,_______83.9%;
Alt-A:_____3.3,______0.66,________5.9%;
Subprime:_5.7,______1.54,_______10.2%.

Prime borrowers, with good income and credit and significant downpayments, actually account for 84% of the delinquencies. The Alt-A category is controversial, and reflects good credit with little documented or insufficient income. Subprime is well known.

Much of the grief for prime borrowers is attributable now to recession, but much of it comes from the fact that the housing price collapse affects them, too, and some have lost down payments.

The story shows the hardest hit area to be around San Bernadino and Riverside CA, about 16% delinquent. The Washington DC area stands at 8%, with concentration more in certain neighborhoods. Boise Idaho is doing well at 5%.

I suppose that this story helps make the argument that homeowners need much of the economic stimulus money, but you either have to print it or play Robin Hood and take it from somebody else.

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