And again, higher unemployment is driving the bad news. Unemployment will get higher so the foreclosure problem is going to spread deeper in the not so distant future. CNBC:
The headline in today's big Q2 Delinquency Survey from the Mortgage Bankers Association is that the face of foreclosure is changing from subprime to prime. Deep in the many many many charts that the MBA included in the "press packet" was the Q109 to Q209 Change in Foreclosure Starts Rate for prime fixed. In the top twenty ten states that showed the biggest increases, only one of the "usual suspects" (CA, FL, AZ, NV) reared it's ugly head: Nevada.
The state with the biggest jump was actually Washington (state, not DC). Maryland, North Carolina, New York, Idaho, and Hawaii were all in the top ten. Job losses are clearly to blame for the foreclosures in these states, but price declines have served to exacerbate the problem.
"Prices are so low now that if you’re hit with an unemployment event, you have no choice but the foreclosure," says Susan Wachter of the Wharton Business School. Whereas in previous recessions, borrowers hit with job losses could simply chose to sell, today so many borrowers are underwater on their loans that selling is not feasible.
