Musical Chairs. Who Will Be Out Next?

Americans who are no longer able to use their home as an ATM machine via home equity loans have went to credit cards to cover the increasing costs of gas, groceries, utilities, and other expenses. In May, the Federal Reserve reported that Americans' credit card debt jumped 6.7% in the first quarter of this year to $957.2 billion.

Delinquencies on debt are also on the rise across the board.

In fact, according to an AP story today:

"The latest snapshot of the mortgage market showed that the proportion of mortgages that fell into foreclosure soared to 0.99 percent in the January-through-March period. That surpassed the previous high of 0.83 percent over the last three months in 2007."

So, we have a new record!

It goes on to say, "The report by the Mortgage Bankers Association also found that more homeowners slipped behind on their monthly payments. The delinquency rate jumped to 6.35 percent in the first quarter, compared with 5.82 percent for the three months earlier. Payments are considered delinquent if they are 30 or more days past due." Of course, delinquency is always the first step to foreclosure, although diversion from that path is still possible... and hopefully the case.

Even Johnny Carson's long-time sidekick, Ed McMahon, is reportedly losing his multi-million dollar home in foreclosure proceedings. In an ironic twist of fate, the Publishers Clearing House endorser, who has showed up on the doorsteps of many American homes to award millions in prizes, may no longer have a doorstep to call his own due to his delinquency with Countrywide Financial Corp.

Countrywide, itself, has had huge collection issues on its mostly high-risk loan portfolio. Most recently, it also received bad PR from an e-mail snafu.

According to a story by CNNMoney, "The chairman of beleaguered Countrywide Financial Corp. raised eyebrows and tempers with his snippy reply to an e-mail plea from a man who said he was in danger of losing his home. 'Disgusting,' Angelo Mozilo wrote in his inadvertent reply to an e-mail from Daniel Bailey Jr. who had asked the company to modify terms of his adjustable-rate mortgage."

It's starting to look like a big game of musical chairs with more and more losing out. Global banker Citigroup announced it will shed $500 billion dollars in assets, which is banker-speak for "those assets were never really worth $500 billion dollars". So, another big company is without a chair, and the music starts again.

It kind of makes you wonder how long this game will last -- and if we're going to go down to the last chair. If we do, perhaps the last chair will be for the bankruptcy judge, while the rest of us stand in the courtroom.

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This blog post by Chris Wathen was also published in his Linton, Indiana based Greene County Daily World blog entitled, “Riddle Me This”.