Housing foreclosures

Detroit leads the nation

LOS ANGELES - The Detroit area, hit hard by the double-whammy of unemployment and a slumping housing market, had the highest foreclosure rate in the nation last year, with several cities in California ranked close behind, an analysis of foreclosure activity in the country’s largest 100 metropolitan areas shows.

I know I have probably said this before, but this is not a major issue. This article got some of it right.

In California, where home values more than tripled since 1995, plunging home prices and tighter lending standards chilled the market, leaving many financially strapped homeowners — some facing steep payment hikes from mortgage rate resets — with few options.

This is what is known as a market correction. The large boom was brought on by sketchy lending (sub-prime loans) to people with sketchy credit and not enough income to buy a house whose price was way overinflated anyway. Half a million for a 1200 sf house built in the 50's? That is just stupid purchasing and even dumber lending.
I watched a 60 minutes segment where it is shown that the majority of these defaults are people who bought a house at an overinflated price and financed it with a sub-prime, and now that it is time to re-finance, they can't get a loan for what they need because the property is worth half what they paid so they are just walking away. That is who has borrowed and want to be bailed out by the Feds.