The Minneapolis Star-Tribune has a story today about the shifting demographics in the wave of foreclosures that have hit Minnesota. In a report to be released today, half of the people seeking foreclosure counseling from the Minnesota Home Ownership Center, a leading foreclosure counseling organization, held prime, not sub-prime, mortgages. Approximately half of those people cited job loss as the primary factor for the foreclosure. This shift is also evident on the national level. According to one study cited in the story, the national delinquency rate for prime mortgages increased from 4.34 percent to 5.06 percent in the fourth quarter of 2008.
One of the myths of the foreclosure crisis is that it is being fueled by reckless sub-prime buyers, who bought houses they knew they couldn’t afford. But the Minnesota Home Ownership Center study, as well as statistical trends on the national level, seem to indicate that job loss, rather than reckless borrowing, may be a more relevant factor. The Star-Tribune story quoted Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. Anderson notes that the new wave of people unable to pay the mortgage often is middle-class families that most likely have two incomes. One loses a job and all of a sudden they can’t afford their house. Or they are under water on their mortgage and can’t refinance. ”As this recession has intensified, the face of this mortgage crisis has changed by 180 degrees,” said Anderson.
If you live in Minnesota and are facing foreclosure, please contact me for a free case evaluation.
(photo: Michael Slatoff)