Insight: An Impending U.S. Mortgage Trouble

Borrowers that miss mortgage payments are skyrocketing, and it’s driving up costs for those who are still able to pay off their mortgage payments. Since a lot of those people are subprime borrowers, that means, there’s even more danger for banks. It’s likely that there will be even more failure to pay mortgages as a lot of those loans are ten years or older. That means, borrowers are going to have to start paying the principal instead of just interest, and even more people are not going to be able to afford it. Payments are nearly tripled because of these defaults. It’s important to realize that the worst of the housing bubble is not over. It’s only just now starting to really hurt the banking infrastructure. It’s projected that the number of people missing payments is soon to double. A lot of this is because of home equity lines of credit. These were once very popular ways of getting some extra cash for a new car, or a vacation. After the new car lost its luster, or the vacation was long forgotten, the debt stayed around. It was less of a problem for borrowers than credit card debt, but it was rarely paid off reliably.

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