Foreclosure and bankruptcy
A few weeks ago, I noticed this piece saying that the mortgage problem in the UK might be worse than that in the US. The reason given (also applicable to Australia) is that the UK boom or bubble in house prices has been much more dramatic than in the US. One statistic quoted in the piece was that there were 14 000 foreclosures in the first half of 2007 a statistic that, as the author notes, makes grim reading. It’s striking then, to read this piece in the NYTimes, predicting 2 million foreclosures in the US this year (since most mortgages are taken out by couples, many with children, the number of people affected is probably more like 4 million). Even allowing for the larger population in the US, this is a huge difference. It now appears that foreclosure has taken over from bankruptcy as the primary mode of financial catastrophe. (Bankruptcy rates plummeted after the “reform” of 2005, but seem certain to rebound in coming months).