Say It Ain’t So - Are Prime Borrowers Not Immune To The Housing Crisis?

In a recent article by the LATimes and a study by the Mortgage Bankers Association, the latest findings show that foreclosures and mortgage delinquencies have been “skyrocketing among prime borrowers”. It’s a daunting reality, but the current economy has shown no mercy to any homeowners, subprime and prime borrowers alike.

In California, we’re facing an even harsher reality as the rising unemployment rates have surpassed 8%. Combine this with the average 30-40% decline in home prices and we’ve got ourselves a real set of problems. While prime borrowers typically document their income and can actually afford their mortgages, the problems of a struggling housing market have no bias. Slipping values, troubled neighborhoods, and rising foreclosures affect everyone; even those labeled as prime borrowers by the mortgage markets.

In California, the situation among prime borrowers proves to be worse as 4.15% of prime loans are delinquent, compared to the nationwide statistic of 3.07%. These statistics were compiled by the Mortgage Bankers Association, and delinquencies were defined as mortgages late on their payments by at least 60 days or already in the foreclosure process.

An unfortunate problems remains that homeowners simply have less options to turn to when things go sour nowadays. In past years, if homeowners suffered a job loss or were tight on cash, many could turn towards refinancing and cashing out the home equity in their home for support. But with mortgage lending options severely cut back, even prime borrowers are having a hard time refinancing or taking out a home equity line of credit.

And even if these prime borrowers meet the qualifications for a mortgage, many still have to deal with the drastic home price reductions here in California. While toxic mortgages and loose lending have dealt their blow to these subprime borrowers, the overall economy has been taking its toll on the remaining homeowners. The forecast for the subprime markets has already been realized, but the true worry is that the problem will spread further among Alt-A and Prime borrowers.

If you’re having trouble with your mortgage, one of the best resources you can find in California is CalHFA and the Hope Now organization supported by HUD and its approved members. You’ll find tips on foreclosure avoidance, loan modifications, as well as necessary contact numbers for lenders in your area.