Foreclosure Is Latest Challenge for Knicks' Curry

Banks Balk at Agency Meant to Aid Consumers
New York Times

Banks and mortgage lenders are placing top priority on killing President Obama’s proposal to create a new consumer protection agency that would regulate home loans, credit card fees, payday loans and other forms of consumer finance. The Obama administration fired an opening shot on Tuesday, sending Congress a detailed, 150-page proposal for an agency that would set new standards for ordinary mortgages, restrict or prohibit risky loans, investigate financial institutions and enforce new laws aimed at protecting credit card customers.

Delinquencies Double on Least-Risky Loans, U.S. Says
Bloomberg News

Delinquency rates on the least-risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure. Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report. First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said.

Can Pay, Won't Pay
The Economist

House prices in America have fallen so far that as many as one in five households have mortgage debt greater than the value of their homes. In a few states, borrowers are not liable for the shortfall between an unpaid loan and the resale value of the home it is secured upon. Even where borrowers are on the hook, lenders often find it too costly to pursue unpaid debts. So some homeowners may be tempted to default and escape the burden of negative equity. How widespread is this practice? New research* based on a survey of 1,000 homeowners suggests that one in four mortgage defaults are “strategic” — by people who could meet their payments but who choose not to. The main drivers of strategic default are the scale of negative equity, and moral and social considerations. Few would opt to renege on their mortgage if the equity gap were below 10 percent of their home’s value, the authors find, partly because of the costs of moving. But one in six would bail out if loans were underwater by a half.

* “Moral and Social Constraints to Strategic Default on Mortgages” by Luigi Guiso, Paola Sapienza and Luigi Zingales

Foreclosure Is Latest Challenge for Knicks' Curry
New York Times

Eddy Curry is facing foreclosure on his Chicago-area home, the latest sign of apparent financial distress for the Knicks’ beleaguered center. According to court documents, Curry is behind on $217,502 in payments on a $3.7 million mortgage. The foreclosure filing, which was first reported by The Chicago Sun-Times, was made Monday in Cook County Circuit Court. The Sun-Times reported that Curry took out a 30-year mortgage, with initial monthly payments of $28,675, when he purchased the home in the Burr Ridge suburb in July 2006. Based on that figure, Curry would appear to be seven months behind on his payments.