Sep
2
For the first time since the subprime mortgage default debacle began in 2006, the number of monthly subprime foreclosure filings has been exceeded by foreclosure filings in prime mortgages.
In July, according to the latest figures, subprime foreclosure filings fell below 100,000 while regular mortgages were involved in more than 100,000 proceedings. The total: a record 197,000 filings.
Throughout the subprime crisis, people who played it conservative, who scrimped and saved and got regular conventional 30-year fixed-rate home loans, congratulated themselves on their prudence. And they were right to do so. But this never meant they were immune to being affected by the more reckless borrowers.
The value of your home is affected by the value other homes in your building, on your block, in your neighborhood. And a lot of those other properties have been selling for fire sale prices as people get out fast to avoid foreclosure, or as foreclosed properties are unloaded by banks, that affects you a lot.
Baltimore and Cleveland have sued lenders over this very thing, charging that reckless lending brought a crash in home prices and equity for responsible households in the same communities.
Add to this the waves of layoffs nationwide, and you get a spreading of the rising ride of mortgage foreclosures nationwide.
Irresponsible lenders robbed prudent American households of wealth. In sketchy urban neighborhoods they impoverished working class families who were doing all the right things. In affluent neighborhoods they took the edge off the wealth of families whose spending could be offsetting the current downturn.
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