The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.
It’s a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.
It also threatens to undermine the housing recovery.
“In the beginning, the higher-end (homes) were a bit isolated,” says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. “But in the last several months, we’re seeing a significant erosion in the higher-end homes. It’s reached into the prime loans.”
California, Florida, Arizona and Nevada represent 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA. – USA TODAY
Memo to NAR: this is why the median price is going up- not because of recovery !
