Friday, December 05, 2008

1 in 10 Homeowners Behind/In Foreclosure

In early October the Wall Street Journal reported that 1 in 6 homeowners are "underwater" on their homes, meaning they owe more debt on their homes than their home is worth. Today the Washington Post reports that a record 1 in 10 Americans are either behind on house payments, or already in foreclosure:

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, and up from 7.3 percent a year earlier.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

And on that front, more bad news:

With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.

The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.

The alarming job decline suggests that consumers and businesses have pulled back sharply on spending in response to the worsening credit crisis. That has put pressure on Congress and the White House to come up with a stimulus package that would substitute for the missing private-sector outlays.

Over all, the losses since January now total more than 1.9 million, with most coming in the last three months.

So tighten your belts, buckle your seat-belt, brace for impact...however you want to put it, our economy is in the toilet and it's not likely to get better anytime soon.

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