Impending Threat of More Home Foreclosures

The big US housing boom really started to dwindle in 2006 and increasing foreclosed news has dominated the media ever since.  Many of today’s homeowner’s (maybe as much as 10% of them) simply cannot keep up with their payments.

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 signs of this coming however, three of them in fact.  First was the bailing out of property owners due to the plummeting prices of real estate.  The second sign was all of the sub-prime loans and adjustable rate mortgages beginning to implode.  Lastly, the third sign has been the fact that even prime rate loan holders are losing their homes now due to job loss and the economic crisis.  In fact, many of these people even have above average or good credit ratings (not for long though).  Unemployment is now forecast to impact about 60 percent of all of the 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.  In all, a total of $717 billion worth of loans were recorded in February – this is an increase of 60 percent from last year.  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 $75 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 then, we should brace ourselves for more foreclosure news that is looming in the neighborhood.