The Atlanta Journal-Constitution
Published on: 10/04/07
Home sweet home for many consumers rests on ever shakier foundations.
Metro Atlantans and Georgians have a tougher time with on-time mortgage payments compared with the rest of the country, based on quarterly reports by Equifax Inc. and Moody's Economy.com.
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In fact, the rate of delinquencies as a percentage of outstanding mortgages was greater in metro Atlanta than in the rest of the country in the second quarter. Mortgages are deemed late after 30 days or more. Many lenders begin foreclosure proceedings after 90 days.
Metro Atlanta's delinquency rate, which stood at 5.07 percent of more than 1 million mortgages in the second quarter, is the highest it has been since the first quarter of 2000, when it was 2.66 percent.
ONE EXPERT SAYS:
We asked Mark Zandi, chief economist at Moody's Economy.com, to explain what's going on behind the numbers.
Q: Why are Georgia and metro Atlanta's rates so high?
A: I think it's a confluence of things. Lenders have been particularly aggressive in extending subprime mortgages in the state to households that are having difficulty in repaying those loans. The housing market has been soft, and among lower income households in particular the job market for lower skilled workers is weakening. The rate of job growth has slowed, and it's particularly weakened for lower skilled workers.
Q: Measured against past down cycles, how does it compare?
A: I don't think we've seen delinquency rates this high since the Great Depression. The current situation is not in the same universe as the Great Depression, but it's as bad as it's been. It's the worst credit quality (cycle) in the post-World War II period.
Q: Could delinquency rates go even higher?
A: Oh yeah, it will go higher. I wouldn't be surprised if the delinquency rate rose another 1 1/2 percent between now and the end of 2008.
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