September 17, 2007:  There may be a change to the old adage that people will do anything to keep their home.

Today, more people are finding it difficult to make the mortgage payment and are opting to be late or delinquent on one debt rather than on many loans.  The result is that an increasing number of consumers risk losing their homes while doing everything to keep their credit cards.

Credit-card delinquencies have generally remained low while banks and mortgage lenders are repossessing a record number of homes after years of lending excesses.

Trouble in the housing market may explain the shift in consumer attitude.  No down payment mortgages became more common in the recent mortgage boom, so some consumers may have no equity and therefore no financial security upon which they may draw.

Second, some homeowners may owe more consumer debt than their available equity can cover.  With home values falling, equity that may be existed could have evaporated.

Third, credit cards may be the only source to help some households with monthly cash flow.

Consumer reliance on revolving credit poses a significant risk for security markets.  Just like mortgages, the receivables generated by credit cards are often packaged into securities and sold to investors worldwide. Any unexpected pickup in past-due credit card receivables could threaten asset-backed securities the way the unexpected surge in overdue mortgages has hurt investors in mortgage-backed bonds.

Source: AP press release from 9/12/07