Americans are erasing debt quickly.

Officially, the Federal Reserve puts total U.S. household debt, including mortgage debt, at $13.7 trillion, or 125 percent of annual after-tax income. But that assumes that the debt will be paid - and that may not be the case.

Mortgage loan expert First American CoreLogic estimates that about 9.3 percent of the country's 52.4 million mortgage holders were 60 or more days behind on their payments as of July.

Joseph Carson, director of global economic research at AllianceBernstein, expects the share of households' after-tax income that goes to pay mortgages and other related financial obligations to fall to 16.3 percent by the middle of 2010. That's considerably below the 20-year average, leading up to the housing boom, which stood at 18.1 percent as of June.

It's part of the cleansing process of a downturn, Carson says. And it's happening a lot faster than people realize.

Source: The Wall Street Journal, Mark Whitehouse (10/26/2009)