Foreclosures: Those with Good Credit, Jobs are Walking Away

ForeclosuresThe foreclosure crisis is taking a troubling turn. Even homeowners with good credit, and often employed, are walking away from their ‘underwater’ mortgages, experts are saying.
And this trend can be seen in the hardest hit states, starting with Florida. One in four mortgages in Florida were either past due or in foreclosure, followed by Nevada, California and Arizona, according to third-quarter 2009 figures.
The statistics hit home for Jose Rodriguez, 31,a resident of the West Kendall suburb of Miami, Florida. South Florida saw some of the highest property value increases before the housing bubble burst last year. It is now grappling with some of the highest foreclosure, or bank-owned, inventories in the hardest hit state.
Rodriguez, a prime borrower with a good credit standing, said he cannot justify making payments on a $275,000 two-bedroom townhouse whose value has collapsed to below $150,000. And he is willing to take the hit on his credit standing by voluntarily entering the foreclosure process. With the assistance of a lawyer, he figures he’ll be able to stay at his townhouse, purchased two years ago, for a few more months.
“I can save thousands of dollars by renting a similar space,” said Rodriguez, who works as a front desk attendant at a Miami Beach hotel. “We here also pay more on hurricane insurance and property taxes. It doesn’t make sense anymore.”
The Mortgage Bankers Association this week reported that fixed-rate loans to prime borrowers continued to represent the largest share of “foreclosures started and the biggest driver of the increase.”
About 33 percent of foreclosures started in the third quarter of this year were on prime fixed-rate loans. And those represented 44 percent of the quarterly increase in foreclosures.
“The foreclosure numbers for prime fixed-rate loans will get worse because those loans represented 54 percent of the quarterly increase in loans 90 days or more past due but not yet in foreclosure,” the MBA said.
Overall, the mortgage delinquency rate reached a record 9.64 percent of all loans outstanding for the third quarter of this year, according to the MBA.
That compares to 9.24 percent in the second quarter of 2009, and 6.99 percent in the third quarter of last year. The delinquency rate breaks the record set last quarter.  The records are based on MBA data dating back to 1972.
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