Sacramento Bee: Mortgage defaults spread as even 'safe' borrowers falter

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Mortgage defaults spread as even 'safe' borrowers falter

By Jim Wasserman and Dale Kasler
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Published: Saturday, Jul. 11, 2009 - 12:00 am | Page 1A


The mortgage default crisis has an ominous new face. It's your neighbor with a traditional fixed-rate loan.

No longer is the real estate bust simply the result of exotic, subprime loans that doubled payments and blew up in homeowners' faces. As the Sacramento economy buckles, even the safest mortgages have become part of a new wave of loan defaults, experts say.

With capital-area job losses reaching 45,000 in the past year and unemployment at 11.1 percent, lenders, bankruptcy attorneys and debt counselors all say they're seeing rising delinquencies among prime borrowers with fixed-rate loans and good credit. Many of those slipping into trouble are state workers, the mainstay of Sacramento's economy.

"The tide has definitely shifted," said Pam Canada, executive director of the Neighborworks Homeownership Center of Sacramento, a nonprofit loan counseling firm. "We're seeing more people with a loss of income."

Prime fixed-rate mortgages, with the most favorable interest rates and 15-, 20- or 30-year terms that guarantee the same monthly payment for the life of the loan, have long been the bulwark of American homeownership. ..........(more)

The complete piece is at: http://www.sacbee.com/topstories/story/2017811.html