More Prime Loans Going Into Foreclosure

Our current economic downturn began with subprime loans. They were going into foreclosure at higher rates than expected, causing a sell-off that flowed through the entire housing market in the U.S. and then on to the world economy.

As expected, prime loans are experiencing surging rates of foreclosure.

The Los Angeles Times reports:

A rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure, adding to concerns about the strength of the economic recovery.

Driven by rising unemployment, such loans accounted for nearly 33 percent of new foreclosures last quarter. That compares with just 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default.

At the same time, the proportion of homeowners with a mortgage who were either behind on their payments or in foreclosure hit a record-high for the ninth straight quarter.