Consumer bankruptcy filings are sure to go up.
Mortgage debt is one reason. The government
just keeps pushing out mortgages to people who
cannot otherwise get them. Those with lower credit scores
Which people, of course, default more often.
Mortgage Debt Problem
FHA loans dominate the sub-prime market, as banks have understandably retreated.
But AnnaMaria Andriotis of the msn.com reports that government money (backed by us taxpayers) goes where private funds dare not venture.
FHA loans have also been the worst performers among all major mortgages for years. Just over 4% of FHA mortgages were at least 90 days past due in October, according to the FHA. That compares with 2% for mortgages purchased and eligible for purchase by Fannie Mae and Freddie Mac, according to mortgage-data firm CoreLogic.
And this segment of the mortgage market is over a trillion dollars, headed towards the 1.3 trillion dollar student loan debacle, even as sub-prime vehicle loans skyrocket.
What could go wrong?
Brenna Watson at the HousingWire website reports:
The Consumer Financial Protection Bureau sent out a warning letter to 44 mortgage lenders and mortgage brokers on Thursday over issues surrounding compliance with the Home Mortgage Disclosure Act.
The bureau stated that it has “information that appears to show they may be required to collect, record and report data about their housing-related lending activity, and that they may be in violation of those requirements.”
What we don’t know can’t hurt us, right? What could they be hiding?
What About Savings To Weather A Storm?
I actually think Americans net worth is now worse than the article from last summer states:
According to the New York Federal Reserve, 14% of the U.S. population lives in households that have “negative” wealth. In other words, these are households that have more debts piled up than assets, which puts their net worth in minus territory.
This one ties in with the student loan debt crisis, as
The composition of debt is also very telling. Negative wealth households have a whopping 47% of debt in student loans, while positive houses have just 6%.
Of course, most of the assets of the positive wealth homes are homes and vehicles. Vehicles are always depreciating, and, now we know, homes can also.
Especially given the FHA statistics above.
Be prepared for a downturn. If you cannot weather one, ask me about how a bankruptcy option might be
your plan B.