The LAW & LAWYERS Blog

A TransUnion study shows that in the third quarter of 2008, 3.96% of U.S. mortgages were classified as “severely delinquent”.  That’s nearly double the historical level and up from 2.56% a year earlier–when the foreclosure crisis already appeared to be in full swing.   And TransUnion doesn’t think it’s over, projecting that severe delinquencies may reach 4.7% by the end of 2008.

That’s due in part to declining home values; residential real estate values are, on average, down 25% from their peak levels–and there’s more bad news in that arena, too.  Oppenheimer’s Meredith Whitney suggests that home values will fall another 20% as mortgage funds become less available.  Whitney projects that over the coming months, we’ll see a decrease in availability of home mortgage credit as the major banks tighten their belts…and that may not be the end of the belt tightening.  Whitney also projects that consumer access to credit card lines of credit will be severely limited, and not just in terms of obtaining new credit.  She believes that as much as $2 trillion in consumer credit will be eliminated through the closing of accounts or reduction of credit lines, as banks try to limit losses.

If Whitney’s projections hold true, we could see a 45% decline in credit available to consumers over the next two years.

This entry was posted on Wednesday, December 3rd, 2008 at 8:24 am and is filed under Bankruptcy Law. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.