In 2006, the housing boom in the US began to cool down 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 are just one 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).  It is expected that unemployment would contribute to almost 60 percent of mortgage defaults.  Unfortunately, this means that even more foreclosure news will be heard through the rest of 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.  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.  The effects of this plan are expected to be felt in the next coming months.  Until that time comes, you will need to brace for the storm and all of the foreclosure news that is still looming out there.




Tagged with: • • • • • • •

Filed under: Real Estate

Like this post? Subscribe to my RSS feed and get loads more!