Looming Threat of Yet More Foreclosures

In 2006, the housing boom in the US began to cool down and increasing foreclosure news is constantly heard from media networks.  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.  The first sign was the massive bailout of home owners that came.  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.  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.

According to an analysis made by New York Times in February 2009 (data provided by First American Core Logic), the number of prime mortgages that have delinquent payments exceeded 1.5 million with loans totaling to 4 billion.  On the same month, delinquencies on subprime mortgages reached 1.65 million while the Alt-A loans rose to 836,000.  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 new Obama administration has announced a plan to try and help as many as four million homeowners via a 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 that time comes, you will need to brace for the storm and all of the foreclosure news that is still looming out there.