Report: Significant number of prime mortgage borrowers have negative equity

A large number of the nation's prime mortgage borrowers are underwater.A recent report from Fitch Ratings revealed that a significant number of prime mortgage borrowers nationwide are experiencing troubles with their loan.The report relayed that more than one-third of all prime borrowers in private-label securitizations currently have negative equity. Fitch Ratings managing director Grant Bailey explained that despite modest gains recently, home prices will need to plunge further before a sustained recovery can take place.”With home prices likely to decline another 10 percent, roughly half of prime borrowers will wind up underwater on their mortgage,” said Bailey.The Fitch report also revealed that slightly more than 12 percent of all prime borrowers are seriously delinquent on their home loans. Bailey explained that prime mortgage default rates will continue to remain high, as home prices fall and the national unemployment rate stays high.Declining equity, rising delinquencies and growing payment shock risk led to negative rating actions for Fitch's review of residential mortgage-backed security transactions, the report showed.With a significant number of homeowners struggling with their loans, the Houston real estate market may experience a rise in foreclosures soon.Courtesy of 2M Realty News

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