Current statistics of homeowners show four types. Those that borrowed at subprime make up 9% of owners. Those who borrowed at prime make up 50%. FHA/VA mortgagees make up 6%, while the remaining 35% of owners own their homes free and clear. So what, right? The flip side of this picture is more telling. Foreclosure statistics show that owners who were approved for subprime loans - they may have paid no money down, did not have income verified, or did not have a sufficient credit score to qualify for a normal, prime loan, among other reasons - comprise 53% of current foreclosures. Prime borrowers make up 33% of this category, while FHA/VA borrowers account for 14% of foreclosures at the moment. Take a minute to let this sink in - one tenth of all homeowners are subprime owners, but they make up more than half of all foreclosures.

The first subprime loans were made in 2000, and none have been made since August of 2007. Roughly 1/5 of all borrowers who have subprime loans are currently late (in default) on their mortgage payments, as opposed to approximately 3% of prime borrowers. The fact that there are no subprime loans being originated right now is a good start, but we will be feeling the effects of this crisis for years. I will examine in my next post who really should be blamed and will try to provide some ways we can fix this problem. For the record, we at Buyer’s Choice Realty encourage all our clients to meet with a lawyer and their lender so they may endeavor to understand the terms of their loan and verify that they can meet their payments.

This entry was posted on Saturday, April 5th, 2008 at 8:46 pm and is filed under Market Trends, Buyer Knowledge, Boston Real Estate, Foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.