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.”
My wife and I are both retired, and together, we have a very good retirement income. I am retired with a 100% service-connected disability from the Air Force, and receive disability compensation from the VA, plus my Social Security, and my wife is retired from a major insurance carrier after 22 years with the company, and her Social Security. Fortunately, we made some wise decisions about our funding, and have suffered very little compared with many folks. We invested in tax-free municipal bonds….no stocks! We had our home built for us in 2003, and were able to secure a 5.4 % interest rate on a 30 year fixed-rate mortgage. We’re not particularly concerned about home values at this point in time because we don’t plan to move from our retirement home. We do sympathize with those folks who’ve lost their jobs and who are in danger of losing their homes through foreclosure.
The fact that we were able to pay $100,000 on the down payment as a result of the sale of our townhome, made, we think, a huge difference, and very significantly reduced our mortgage payments. We think that this gave us an advantage that many buyers don’t have…..having sold a home for many times what we originally paid for it.
Cennydd, congratulations on your relative stability, something to be grateful for in any time but especially one like this.
CitiMortgage just tried to jack our monthly payment by $1100 for “escrow” purposes (not a rate reset). I told them they better be happy with the interest on the debt for now….
Thank you, Kendall. My wife and I raised a son and daughter, and worked for over 40 years to get where we are, and we truly do feel fortunate, and believe me, it has been far from easy. I only wish that others……some of whom are family and friends……were as fortunate as God has permitted us to be. There were times when we didn’t think we’d make it.