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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (37265)	9/15/2005 1:30:47 PM
From: Chispas	Read Replies (2) \| Respond to of 116555

Wave of mortgage defaults expected in southern US . By Christopher Swann in New Orleans Louisiana officials are braced for a wave of personal bankruptcies, creating a lasting financial hangover for the citizens of one of America’s poorest states. While many houses and jobs have been destroyed, mortgages remain, state officials warned. With many in the city lacking flood insurance, personal bankruptcies are expected to soar. “We are going to see a lot of insolvency in the state,” said Michael Olivier, the state’s economic secretary. “The US economy is often powered by credit and there is a risk that we will have a lot of people with damaged credit ratings for a long time. Each day we learn about the next fire we have to put out.” One-fifth of Louisianans already lived below the poverty line before Hurricane Katrina. The state’s bankers’ association has stopped sending out mortgage bills, but only temporarily. Mr Olivier said banks were likely to lose a lot of money since their security – the houses – were now worthless in many cases. But new federal laws may make it even more difficult for hard-pressed individuals to seek protection from creditors. Local lawyers are pressing for amendments to the new law, which goes into effect on October 17. Americans filing for bankruptcy would have to provide detailed records, such as pay stubs and tax records – many of which may have been lost in the flooding. Wealthier individuals will face a means test in order to prove they are unable to repay debts. Local bankruptcy lawyers were due to meet on Tuesday to plan a campaign to moderate the new laws. Rates of bankruptcy have increased 50 per cent faster in areas hit by hurricanes, according to a study published in June by Robert Lawless at the University of Nevada in Las Vegas and Elizabeth Warren at Harvard University. But the spurt of insolvencies usually comes between one and three years after the disaster. Some citizens unable to declare insolvency may find themselves forced to continue paying mortgages on properties that no longer exist even while paying for new accommodation. """""""" Last article in this link - investorshub.com