Prime Loan Default Rates Doubled as Credit Tightened, U.S. Says

[Purveyor]

Source: Bloomberg

By Margaret Chadbourn and Kathleen Hayes

April 3 (Bloomberg) -- Delinquency rates on the least risky home loans, which account for two-thirds of all mortgages, more than doubled last year, showing credit quality deterioration is spreading through the housing market, U.S. regulators said.

Seriously delinquent prime loans climbed to 2.4 percent of total loans on Dec. 31, from 1.11 percent in the first quarter, the Office of the Comptroller of the Currency and Office of Thrift Supervision said today in a report. Mortgages in delinquency rose 30 percent in the fourth quarter, accounting for 4.6 percent of all home loans, the report showed.

“We’re in uncharted territory, we’ve never seen the number this high before,” John Dugan, U.S. Comptroller of the Currency, said in a Bloomberg Television interview today.

Prime loans account for most of the 35 million U.S. mortgages, and 553,736 were seriously delinquent, or 60 days or more overdue, in the fourth quarter, the report showed. Credit quality declined for a third consecutive quarter, as mortgages that are current fell below 90 percent as of Dec. 31 from about 93 percent on March 31 last year.

The report also showed that mortgages modified in the first quarter, to help borrowers keep their homes, fell delinquent 41 percent of the time after eight months, and second-quarter modified loans had a 46 percent default rate, the report said. Third-quarter trends “are worsening,” the agencies said.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a.lUj_ASQaEE&refer=home

[w4rma]

1. It is only going to go up, because Americans do not need more credit, but instead need less debt.

But where are the trillions of TARP money going? Supposedly, to increase credit for Americans already in deep debt. (Actually, right out of the country and into savings accounts for some very wealthy individuals who won't be spending anything in this nation.)

[soothsayer]

2. The dudes from the MN fed (or somewhere up there) said they never saw that credit tightened

in the first place. So godnoze what to believe.

[AndyTiedye]

3. These are PRIME Loans. The Problem Here is Job Loss

These WERE good loans, to borrowers that had good, stable, jobs and were not carrying too much debt. Then the borrowers were laid off.

[bemildred]

4. If you don't have a good job, you can't pay off your massive debts. nt

[terisan]

5. Also if you have to move for another job and can't sell house, probably have to default

[bemildred]

6. Yeah, it's like if you fuck enough people over to get rich, it has a cost. nt