More Homeowners Defaulting on Mortgages
ALEX CHADWICK, Host:
Back now with DAY TO DAY, and evidence today that more homeowners are not able to keep up with their mortgage payments. At the end of last month, 2.3 percent of the nation's home mortgages were delinquent. That is the highest level in three years. Joining us is John Dimsdale from MARKETPLACE. John, why are we seeing so many Americans falling behind in these mortgage payments?
JOHN DIMSDALE: Now, some of this new information on delinquencies comes from the Moody's research arm, Economy.com. Mark Zandi, the chief economist there, says we're seeing the fallout from the bursting of the housing-price bubble.
MARK ZANDI: Many households, homeowners, got in thinking that the housing market would remain very strong at that these mortgages were temporary, that they'd be able to get into something more traditional and easier to manage. But now with the market turning against them and prices flat to down, it's much harder for them to do that.
CHADWICK: John, these rising mortgage delinquencies, what are the numbers historically? Are they are historically high levels here?
DIMSDALE: Not yet. The numbers are just getting back to average. They've been low for several years. But banking regulators are beginning to warn lenders to tighten up their standards, to stop making loans to buyers who are taking on more debt that they can handle. The bank examiners worry that the result could be a wave of foreclosures that will create a real drag on the economy.
CHADWICK: So this is going to mean more problems for homeowners struggling to make their payments, these higher interest rates on mortgage loans?
DIMSDALE: Coming up later today on MARKETPLACE, we'll take a look at the economics of ethanol and whether the numbers add up.
CHADWICK: Thank you, John Dimsdale of public radio's daily business show MARKETPLACE, produced by American Public Media.
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