Now it is the prime borrowers, not just subprime, who are defaulting at increasing rates.
Borrowers of prime mortgages are becoming more delinquent in their payments. Fannie Mae (FNM) and Freddie Mac (FRE) mortgage delinquencies among the most creditworthy homeowners rose 50% in a month as borrowers said drops in income, lay offs, or too much debt caused them to fall behind, Bloomberg reported, citing data from federal regulators.
The number of so-called prime borrowers at least 60 days behind on mortgages owned or guaranteed by the companies rose to 743,686 in January, from 497,131 in December, and is almost double the total for October…
Of all borrowers who ended up in default, 34 percent told Fannie and Freddie they were earning less money, about 20 percent cited excessive debt as a reason for missing mortgage payments, and 8.1 percent blamed unemployment….
Having high quality borrowers, the best credit-risk group – those that have documented income, made significant down payments and have good credit – fall behind in their payments…well, without sounding too panicky – it is rather alarming. Let’s keep in mind two-thirds of U.S. mortgages go to prime borrowers.
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