Looming Threat Of More Home Foreclosures
In 2006, the housing boom in the US began to cool down 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 are just one example. Unfortunately this has led to a decrease in home values as well which just adds fuel to the fire. Additionally, state and most local governments were forced to cut back on their spending because the drop in the value of these properties sharply decreased their tax bases.
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. 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. 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. In all, a total of $717 billion worth of loans were recorded in February - this is an increase of 60 percent from last year. These foreclosures spelled catastrophe for Wall Street due to the mortgage bonds that they are securitizing. 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 $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 that time comes, you will need to brace for the storm and all of the foreclosure news that is still looming out there.
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