Expansion of foreclosure crisis into prime market linked to unemployment

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Rising unemployment is causing the foreclosure crisis, which started with the relatively small subprime market, to expand to prime borrowers. That’s a much larger pool of homeowners, a sign that the foreclosure rate — more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending — isn’t likely to slow down in the near future. “People are no longer defaulting simply because of a change in the payment structure of their loan. They are defaulting because of lost jobs or reduced hours or pay,” said a September report by a Florida foreclosure task appointed by the state’s Supreme Court. Michael Barr, assistant secretary for financial institutions at the Treasury Department, said last month that more than six million families could lose their homes over the next three years.

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