Despite a recent increase in housing prices and the administration's optimistic talk about the "end of a recession," the ripple effects of the mortgage crisis continue to hurt many homeowners.
Even the most credit-worthy Americans are starting to fall behind on their mortgages, according to the Wall Street Journal.
While mortgage-delinquency rates for sub-prime borrowers appear to be holding steady after steep declines, the pace of delinquencies for prime borrowers is on the rise.
The trend doesn't bode well for troubled banks and any current or forthcoming recovery:
Since prime loans account for 80% of U.S. bank exposure to mortgages and credit cards, these losses could ultimately exceed those from weaker borrowers...
For prime borrowers, this recession has been especially tough because declining home prices have taken away one of the typical crutches for them since it is harder to tap the equity in their homes to pay their bills if they lose their jobs, according to a report issued this week by Standard & Poor's.
The Journal's report comes on the heels of positive comments about the economy by Vice President Biden. "Instead of talking about the beginning of a depression, we are talking about the end of a recession," Biden said as he touted the results from the $787 billion stimulus, reports the Washington Post.
And the trend looms despite good news in the housing market which showed some strength recently when a key indicator of U.S. home prices staged its first quarterly increase in three years.
The Los Angeles Times reported:
The S&P/Case-Shiller U.S. national home price index, which tracks housing prices across the country, rose nearly 3% in the second quarter compared with the first three months of this year.