Debt Reduction in America

According to the New York Fed’s report, about 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010. Officials say this represents a 5.5 percent decrease from the second quarter and a 6.4 percent drop from a year earlier.


The Fed says consumers are continuing to trim their debt. It’s a trend that has been evident for the previous seven quarters, though the pace of decline has slowed recently. Since peaking in the third quarter of 2008, nearly $1 trillion has been shaved from outstanding consumer debts, the federal bank reports.

Excluding the effects of defaults and charge-offs, available data show that non-mortgage debt fell for the first time since at least 2000. Also, net mortgage debt paydowns, which began in 2008, reached nearly $140 billion by year-end 2009.




The Fed says “these unique findings suggest that consumers have been actively reducing their debts, and not just by defaulting.”