Stressed borrowers use plastic to delay default

[NNN0LHI]

http://news.yahoo.com/s/nm/20071028/lf_nm/usa_creditcards_debt_dc;_ylt=AsgH23DRm1kPHgpOb3JeUe6s0NUE

By Nick Carey
Sun Oct 28, 1:59 PM ET

CHICAGO (Reuters) - This may be Johari Reeves' last chance to catch up on her mortgage payments. The credit cards, she'll worry about later.

"We fell behind (with the mortgage) and twice we agreed to new repayment schedules that didn't work out," said the 31-year-old, a compliance officer at a small bank on Chicago's blue-collar South Side. "It's been a lot of stress. But this time, if all goes well, we should be able catch up."

In August 2006, Reeves and her husband bought a $214,000 home with almost no money down, leaving them with a monthly payment of $1,636 -- higher than they planned on, especially with her husband's furniture sales job largely commission-based and business not good due to the U.S. housing slowdown.

An attempt this spring at refinancing with another lender fell through, leaving them behind on payments and struggling.

But as part of her efforts to avoid defaulting on the mortgage, Reeves said she has "maxed out" all her credit cards, spending to the limit on basic needs. "Now all I'm doing is making the minimum monthly payments."

[Purveyor]

1. I understand the CC banks are vigorously reviewing the credit of their existing

customers and wantonly raising interest rates and cutting credit limits for those with deteriorating credit scores.

The revolving credit industry will be the next 'shoe to drop' for the banking industry.

[MissB]

2. They should've waited until they could put money down.

And, they might consider at this point actually selling the house if at all possible.

I feel for them, but it sounds like they made some no-so-smart financial decisions.

[enid602]

3. 'compliance officer'

The shoemaker's children go barefoot.