I’ve said for a long time that one of the reasons our consumer spending numbers have been “reasonably good” the last six months or so – and have been improving – is that people haven’t been paying their mortgages.
Now comes Bank of America about to tell Congress the same thing:
Bank of America’s top mortgage executive, testifying today before Congress, will release sobering details of home-loan delinquencies, including that “hundreds of thousands of customers” haven’t made a credit card payment in more than a year.
And, to put a number on it…
Almost 500,000 struggling loan customers have not supplied information or taken other basic steps to qualify for mortgage help. About half of them have not made a payment for more than a year, or owe more than 50 percent of the value of their homes.
That’s because those 500,000 lied about their income, assets or both when they applied for the loan originally, and that deception would be discovered.
But this also means that some 250,000 of those customers have not made a payment in a year.
If we presume that these people have average mortgage payments of $1,000 a month (and this number is probably low), this amounts to $250 million monthly that is being spent in the economy but would otherwise go to mortgage payments.
Read the entire article here.
All citizens should be very concerned about the condition of the financial institutions in the United States. The longer this problem of the banks not reporting these bad motgages on their balance sheets the worse the outcome is going to be.