The big US housing boom really started to dwindle in 2006 and increasing foreclosure 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 are just one example. Unfortunately this has led to a decrease in home values as well which just adds fuel to the fire. 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. 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). On the same month, delinquencies on subprime mortgages reached 1.65 million while the Alt-A loans rose to 836,000. Shockingly over $717 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. These also lead to bank loses of hundreds of billions. (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 new Obama administration has announced a plan to try and help as many as four million homeowners via a $75 billion dollar spending bill. 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.
