Half of Prime Mortgages Could Go Upside Down
Half of borrowers with prime loans -- or loans made to borrowers with good credit
and income -- will likely end up underwater
anyway, according to a recent report.
Already more than one-third of prime mortgage
loan borrowers are underwater or owe more on their homes than they're worth and with home prices
expected to drop by another 10 percent, half of prime borrowers will likely end up underwater, a Fitch Ratings report found. More than 12 percent of borrowers are seriously behind on their payments according to the report, putting them at risk of defaulting.
default rates will stay elevated as home prices
fall further and unemployment
remains high," Fitch Ratings Managing Director Grant Bailey said in a press release. The report indicates that the credit
crisis and falling housing
prices are taking their toll on homeowners. Compounding those factors, out-of-work homeowners are likely having trouble finding a job
. U.S. employers
added 103,000 jobs in September, which wasn't enough to push the unemployment rate down from 9.1 percent.
Lawmakers are looking for a way to save hundreds of thousands of Americans from their underwater mortgages and spur a recovery in the housing market. Officials said they hope to unveil a plan in the next few weeks that would allow between 600,000 and 1 million borrowers to refinance their loans and lower interest rates, Reuters reported.
For the full story
, see The Huffington Post.
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How to Buy Foreclosures
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