Mortgage Defaults on the Rise for Prime Loan Borrowers as Well

It's not surprising news; mortgage defaults across the nation continue to rise as more people are failing to make mortgage payments. What is surprising is that much of these delinquencies are coming from homeowners that have strong credit and used prime loans to finance their homes. Countrywide Financial Corp. reported that it's second quarter profit shrank by nearly a third as soft home prices led to rising mortgage delinquencies and defaults. Higher unemployment and divorce rates, and slower market sales are being blamed for the increase of delinquencies from prime loan borrowers. Most of these delinquencies are being seen in specific types of prime equity home loans - those requiring little or no documentation, those with a high loan-to-value ratio, or piggyback loans, a second mortgage loan taken out in addition to the primary in order to avoid paying PMI. Unfortunalty many homeowners with great credit are stuck with not a lot of alternatives.

The increase in mortgage defaults and delinquencies in Tucson's Real Estate market are mostly due to subprime lending. During the Arizona Real Estate Boom of 2005 and 2006, many first time home buyers obtained loans from subprime lenders. Now many of these homeowners aren't able to afford their mortgage payments with interest rates rising, but they aren't able to sell their home they can no longer afford in todays slower market. This is leading to higher foreclosure rates and more active listings in the Tucson real estate market.

As usual, the Tucson's current real estate market is great for buyers that are loan qualified and ready to go. The high home inventory is a buyers dream as they have their choice of numerous properties and more time to decide what's best for them, rather then making a split decision they aren't prepared for as in prior years.