Ongoing Threat of Yet More Foreclosures
The big US housing boom really started to dwindle in 2006 and increasing foreclosure news has dominated the media ever since. Homeowners began to lose their homes or are threatened with foreclosures because they have failed to keep up with the payments on their mortgage.
Many of the foreclosed homes are tied to neighborhoods where subprime martgages were widespread. MS Foreclosure for example. Decreasing home values also contributed to the increase in number of these foreclosures. Add to that the fact that local government spending has also been cut way back because this decrease in home values has also resulted in a decrease in property taxes and their annual budgets.
There were 3 different foreclosure signs that were observed by people involved in the market. The first sign was the massive bailout of home owners that came. The secondary sign involved previous borrowers with expired introductory interest rates resulting to keeping up with a higher rate and the third one, which is currently beginning to build up, are the people holding prime mortgages and who have lost their jobs due to the economic meltdown and are now unable to pay on their mortgages. Most of them even have good credit ratings. It is expected that unemployment would contribute to almost 60 percent of mortgage defaults. Basically, more foreclosure news is expected to arrive this year.
The New York Times stated in February of 2009 that there are more than 1.5 million prime mortgages alone with delinquent payments (data by First American Core Logic). In that same month, the delinquencies on the even worse off subprime mortgages were as high as 1.65 million. Shockingly over 7 billion in bad loans were on the books for February – up over 60 percent from the same time period a year ago. All of these foreclosures have also dramatically impacted Wall Street and mortgage bonds. Not to mention the hundreds of billions of dollars that the banking industry has lost. (Note: Search on ‘forecloser‘ as well because it is a very common miss-spelling of foreclosure and is prevalent in the foreclosure news posts.)
The Obama administration announced in February that they will be spending billion to save as much as four million homeowners from foreclosures through mortgage incentives and reduced payments. Unfortunately it may take months before anything ever comes of the plan and for many that will be too late. Until that time comes, you will need to brace for the storm and all of the foreclosure news that is still looming out there.
