Haynes and Boone's Newsroom

Putting Preventive Practices to Work
02/07/2008
John Middleton

Introduction

It is no secret that consumers are facing a crunch in the current economy. Mortgages continue to escalate into foreclosure as a result of the subprime crisis, resulting in a number of unsavory records. For example, the third quarter of 2007 saw a record number of mortgages entering the foreclosure process – 0.78 percent of all mortgages. Additionally, a record high 1.69 percent of all mortgages are currently in the foreclosure process. This trend is likely to continue, as 5.59 percent of borrowers are at least 30 days late in making their mortgage payments – just shy of the record 5.68 percent recorded in 1986. Similarly, 1.26 percent of borrowers are over 90 days late, also a record high.¹  This housing trouble is spilling over into other consumer areas, as well. Auto loan delinquencies are steadily increasing – for example, the percent of top-rated borrowers over 30 days delinquent jumped from 2.9% in August to 4.5% in September, the largest one-month increase in over eight years. Subprime borrowers are also headed into trouble, with an increase in delinquency from 11.1% in August to 12% in September. Delinquency rates this high have not been reached since 2002.² Credit card defaults are on the rise as well, rising 18 percent to almost $961 million over the past year.³

The complete article appears in the PDF below.