Jobs, not Subprime, Drive Foreclosure Rates

April 12, 2007
Jobs, not Subprime, Drive Foreclosure Rates

NATIONAL (April 12): California is the home base for many of the country's biggest subprime lenders, including Countrywide Financial and Wells Fargo; and with 22 percent of its total mortgages considered "risky," it leads the nation in terms of lending to borrowers with flawed credit.

Even so, California's foreclosure rate for the fourth quarter of 2006 came in at just 0.43. On the other hand, Midwestern states like Indiana, Michigan, and Ohio all crossed the 1-percent threshold.

Economists attribute the Golden State's resilience to a robust economy that continues to create jobs —which in turn allows residents to remain in their homes, supports housing prices, and allows home owners to use equity to refinance out of adjustable loan terms and into fixed loans.

Michigan, Illinois, Indiana, Ohio, and other Midwestern states, meanwhile, have been battered by the one-two punch of declining residential values and the loss of tens of thousands of manufacturing jobs, following cutbacks at auto companies.