The Mortgage Foreclosure Crisis – The Truth Behind The Numbers

I’m sure you’ve seen the following headline or heard the “sound bite” over your radio or from your local news anchor, “Record 1-in-10 Americans in mortgage trouble”. Before we examine this sad statistic, we should note that 9 out of 10 homeowners are not “in trouble”.

Exactly what do the authors of this article have to say, well consider this, “The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter”. Please note 2 items, the article does not state how much of an increase has taken place since the April to June quarter, nor do the authors note that 9.2% would, in fact, represent  1 in 10 home owners.

What is not being discussed is this fact, “[The] delinquency rates for traditional 30-year fixed rate loans made to borrowers with strong credit loans rose to 3.35 percent in September from 3.07 percent at the end of June.”

The 30 year historical default rate for 30 year fixed mortgages is 3.2 percent. The 30 year “fixed” mortgage has always been referred to as a “traditional mortgage”. It was not until the advent of LIAR LOANS and NINJA Mortgages that this country saw the development of the “Sub-prime” market. The authors of this article imply that “strong credit” is required for a 30 year fixed rate mortgage, for most of the last 75 years one has had to simply prove an ability to “repay” ones mortgage and to have saved a “down payment” to qualify.        

Two out of every three mortgages currently “in trouble” are of the “sub-prime” variety. A “sub-prime” mortgage is 700% more likely to go into “default” or “foreclosure” that a “traditional mortgage”.  

Once again the pundits have the “cart before the horse”. The economy is being ruined by the reckless lending practices created by the Government when it forced LIAR & NINJA loans on the banking community. The percent of “traditional mortgages” that end up  “in trouble” or “default” or “foreclosure” has not changed substantially over the last 50 years.

The mortgage crisis is centered on the “sub-prime” mortgage market. The “sub-prime market is responsible for 2 out of 3 “defaults” or “foreclosures”. Many of these sub-prime mortgages were given to people who should not have received them in the first place.

If we are not truthful about the cause of our problems, we will never correct our mistakes ……….

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