Americans Reduce Their Housing Debt

The amount of outstanding housing debt in the U.S. fell to $9.8 trillion at March 31, compared to $10.1 trillion at yearend, the first such sequential decline since National Mortgage News began tracking such figures 12 years ago. Overall, the lower balance owed shouldn't come as a total surprise. Millions of homes have entered foreclosure the past two years, wiping that debt off the balance sheet of residential servicers. When mortgage bankers finally take title and place the house back on the market, the "new" sales price will be lower - in come cases much lower - than the old price. What this effectively does is reduce not only the outstanding mortgage bill for the nation, but it lowers the base of receivables that mortgage bankers can earn servicing fees on. "The numbers are definitely declining," said Jay Brinkmann, chief economist for the Mortgage Bankers Association. The trade group tracks mortgage debt differently than this newspaper, but its findings are similar: consumers have reduced their residential debt load. (For the full story see this week's paper edition of National Mortgage News.)