Credit Rating Agency Sees Foreclosures Going Up

If an American can't make ends meet but wants to pay their debts they can, with the help of a federal bankruptcy court using chapter 13. Unless, that is, their problem is caused by a mortgage payment they can no longer meet. Although a bankruptcy judge can reorganize your car loan by making the interest rate and monthly payments realistic, the court has no power to do the same with a mortgage. Appeals to congress and the president to change the bankruptcy law to allow the courts to save families from foreclosure have gone unheeded.

Now, Fitch Ratings, one of the three rating organizations designated by the U.S. Securities and Exchange Commission along with Moody's and Standard & Poor's, has some bad news about foreclosures to come.

In a new report, Fitch Ratings is revising (up) its estimates of foreclosures and losses for subprime mortgages made in 2006 and 2007. The news is bad. Fewer homeowners who are behind are able to catch up on payments ("rolling current") and far fewer are able to sell or refinance their homes to avoid foreclosure.

Fitch is now predicting about half the subprime mortgages issued in 2006 and 2007 will end in foreclosure. In other words, the 20,000 American families losing their homes every month now, is a tragic number on its way even higher.