The Coming Foreclosure Flood
Heartened by the recent rise in home prices? Don’t get too comfortable. Standard & Poor’s, the credit-rating agency that tells investors what mortgage-backed securities are worth, reports that the increase was just an illusion. It predicts the nation is about to see a deluge of new foreclosures that will drive real estate values back down.
Blame the “shadow inventory” – nearly 1.8 million homes that are on the road to foreclosure but for all kinds of reasons haven’t gotten there yet.
Many homeowners have fallen behind on their mortgages or stopped paying, but foreclosure has not yet arrived. Mortgage servicers, the folks who send you the bills and file for foreclosure when you can’t pay them, are overwhelmed. Courts, too, are backed up. Mortgage modifications and foreclosure moratoriums have put off the day of reckoning for borrowers, but not forever. And unemployment is sabotaging more homeowners every day.
Out of more than $1.6 trillion in existing mortgages that were packaged into mortgage-backed securities by Wall Street, some $425 billion worth are extremely late on their payments, and therefore likely to go into foreclosure. Only a fraction of borrowers who fall seriously behind are able to catch up, with the help of a loan modification. And even then the majority end up falling behind again. That amount of bad mortgage debt has been spiking up every month, slowing down just a little thanks to the government’s Home Affordable Modification Program, but still continuing to rise.
Meanwhile, even as the amount of unpaid mortgage debt rises, the number of foreclosed, bank-owned homes for sale has been holding fairly steady. That tells us that the number of foreclosures for sale on the market is actually just a sliver of all the ones that are really out there. S&P’s chilling conclusion: “Overall, it is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”
Source:
The Coming Foreclosure Flood
housingwatch.com
21 Comments on “The Coming Foreclosure Flood”
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NPI Impact August 2010
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Many “bought” homes they couldn’t afford. Others withdrew equity speculating that real estate would always go up, only to buy foolish soft consumer items and now cannot afford their debt. All are crying in their alphabet soup now. Well, for those of us who didn’t buy, we are relieved and do not consider this a housing “crisis”. The crisis was when houses were hyperinflating to stratospheric heights year after year and so were rents. Bloated smug landlords now sheepishly hiding and no longer boasting their real estate “holdings”. haha.
This is relief, not a crisis. When an economy only measures itself by new housing starts something is critically wrong. The value system is way off, and did the developers plan to leave any ag. land or mining land left? How about any trees in our national forests? Is nature valued? How about peace and quiet from all the machinery? Sick society and many if not most people were sickly participating in it as much or more as the bankers and brokers.
Can you say “short sale”?.
Jacob’s trouble is just beginning, and hes’ asleep.
Still supportive of the fiat, legal-tender scam foisted on America in 1913 by the unconstitutional Federal Reserve Act, wherein our money is created by signing our lives away in promissory notes to a banking cartel that charges us interest on fiduciary media (fake money) they create out of nothing?
The answer to that rather long-winded question is the key to our destiny as a free people. Find out how money is actually created in the modern-day world and you will be outraged over the power given to a few by a Congress of lackeys.
We are indentured servants to a financial class. That they control our economy is a travesty of the Constitution and a delusion of empire. It will lead to an impoverishment of society and a devolution to a new feudalism. Return to honest money and non-fractional reserve banking.
Yeah, The author is right. There is still a massive amount of mortgage debt that isn’t worth the paper that it is printed on. Look, the toughest job in the circus is following the elephants. Cleaning up the heaping piles of crap that Bush and Cheney left behind is going to take decades!
All that can be fixed in notime. Abolish the FED
The unemployment mentioned in the article has a second collateral and graver effect on the economy: businesses closing down. With this comes the first commercial wave of foreclosures. Exponentially there are less and less new and existing tenants for office buildings, shopping centers, apartment buildings, etc. This, sooner or later, will bring us a large number of commercial foreclosures, affecting the banks and their ability to issue credit and loans further adversely affecting the industry and commerce . . .and so goes the circle.
Sadly, nearly one hundred years ago the Federal Reserve was created to prevent these maters, instead, our money, the dollar, has lost nearly 100% of its value. And we continue trusting them . . . Where are Benji, Tommy, Bob, and Sammy when you need them?
Just dump your mortgage. It’ll help speed up the recovery, plus you’ll get a life once again.
As you look behind, just feel relieved that you just dumped the biggest single liability you ever owned.
From the best I am able to determine, some people really did not see this coming.
well add that to the CRE crash that coming and we see the Republicans set us up to lose big during 2000-2008-and Obama aint helping either
The greatest of all great depressions by 2012
*Commercial Real Estate
The data I’ve seen states the second great spike in residential defaults/foreclosures will not arrive until mid 2011. I think things are going to get very nasty in all real estate sectors except of course immediately around DC!
Housing will break the bank… as your Media & talking Political heads keep saying we are recoverying ??? To bad Government is SOOO Big, because instead of saving Americans they saved the Slave Master… BIG BANKS. When the people hit the streets like they are in Greece….Our Government again, will protect the Banks…Not the people. Look right now these banks don’t have standing Armies……but, as most governments our Government will protect these Leeches…if they wanted too they could just tell the banks take a hike & leave our shores & the debt??? Forget about it, let those that gave the money, lose the money..that is their risk not ours…….We could burn down the banks, it might just come to that if we are to survive…….If we don’t burn down the banks, then Slavery will be were your pay check if you are employed will be the Governments..A 4 trillion debt even if you paid a Billion dollars a day means 1460 years to pay it back….
if we can get rid of property taxes mixed in with the mortgages, maybe we’d have half a chance of staying afloat. there’s a move here in pennsylvania to do just that. check out their site at grandoldusa.com they seem to have their act together and possibly the legislators will give heed. youtube.com/goldieshome goldieshouse.piczo.com
Good cheap livin’ ahead!
Thank you for getting this information out cause the mainstream media is not warning us. Wait until the commerical property (& malls) starting folding this year. It’s going to be ugly.
With riots in Greece & Iceland, it’s only a matter of time when foreclosures come to America & then there will be major problems. After this happens, what’s next in America?
If ur interested, there is a new book just out about a small town that finally stands up to federal tyranny (corrupt politicians, loss confidence in our govt. ) & ends up starting the 2nd American Revolution.
I only recommend it cause it could happen when Americans get enough of high taxes & govt. tyranny (American Revolution). It’s a great read for what’s coming in 2010.
http://www.booksbyoliver.com
In ‘01 I took a SMALL mortgage for a place (28 acres of rural land) I could afford & put a used mobile home on it. Paid off the mortgage in 5 years, although for the last decade I haven’t earned over $20K a year. I am now debt-free and can live on a few hundred dollars a month. I save half of my inome and thus have a nice pile of cash. I can grow plenty of food on my land and raise cattle and chickens. The coming depression will be a boon for me. Friends and relatives made fun of me 10 years ago as they were riding high and taking on debt to buy luxuries. They’re not laughing any more, as most have lost their houses and all they owned. Live responsibly and within your means and you will prosper.(Even when Uncle Sam is trying to take the fruit of your dilligence to pay for your neighbor’s misdeeds and irresponsibility). Get out of the system! Don’t work in situations where they will take taxes out of your pay before you even see it. Don’t go into debt for ANYTHING! You can live well on very little money without the burden of high taxes and interest, in the right places.
Blame Bush…blame Cheney…blame Obama…blame Clinton… How about everyone take a deep breath and realize that this is about old-fashioned greed and mendacity at many levels — personal and society wide, and about a system that has grown so complex that seemingly insignificant changes (such as the Clinton Admin requiring banks to extend credit to non-credit worthy folks) have unexpected and dramatic consequences. The Republic is dead. Long live the Republic…
I find it unusual that no one talks of the inequity of housing lending. If I buy a stock, a piece of real estate, an ounce of gold, or pretty much anything as an investment, I risk my investment based on what others think it is worth. Why is anyone who borrows on a home, not an investment, but a necessity, demonized when they can’t see their way clear of the costs of home ownership after their house’s value drops, their 401k drops, and 20% of their neighbors lose their job and can’t pay their mortgages furthering the downward spiral. For banks, the security of the investment itself, the house, is not enough. They want it both ways. They want to own YOU not just the paper in the deal. Either you pay the bank in full so they don’t lose anything, or you lose by by paying more for everything that is tied to your credit score. You may even owe taxes on the GAIN you RECIEVE when you are losing everything. Then of course the bank may sue you for the loss. I wish I could do that when my stock investment goes down, or when my gold investment goes down. The banks write the loss off of their books. But when I sell my house for less than I paid, I get nothing. We won’t even go into the bank bailouts. Something definatley needs change here. We as housing borrowers (personally) are being used to hedge the bank’s increasingly risky investments in the stock bubble and other “opportunities” that they create. Sorry for stepping on toes. You know who you are.
Dear National Policy Institute,
THiS IS UNCONSCIONABLE AND SHOULD NOT BE ALLOWED. THE TARP MONEY WAS USED TO PAY OFF ANGRY BANKERS IN OTHER COUNTRIES FOR DERIVATIVES THAT GOLDMAN SACHS KNEW WERE GARBAGE TO BEGIN WITH.
Foreclosures simply torpedo home values and put families into the street. That doesn’t help anybody. State legislatures should be calling for a moratorium.
MK
It’s nothing to do with “buying a house” but it’s everything to do with “being sold into a mortgage debt”.
Las Vegas prices were down, now they’re showing a small spike, some sellers trying to get better prices, starting to overprice for the cash investors and requiring buyers to return to banks and thus to mortgage financing again.
So the agents are less busy trying to unload cheapie specials and more concerned about turning over buyers to the clutches of mortgage financiers, the banks, once again.
I hope there are more REOs and short sales and it drives the market back down to where the average person can afford to buy a house to live in instead of for “investment purposes” as has been the case for a good ten years before this whole collapse began.
What a scam. Nothing to do with “buying a house”. Talk to the agents and they’re more than happy to “sell you into the bondage of a bank mortgage”. That’s all they’re concerned with, convenient tools for the bankers.
Sound money will go a long way toward fixing our current mess.
This mess has brought down home prices.
==> Fannie, Freddie and FHA are nearly 100% of the mortgage market these last 2 years. Nationalize? Nationalized?
Central Bank creation of debt (pretending to be money; see: “Money as Debt” “MoneyMasters” “Ron Paul sound money” “Dishonest Money, Honest Money”) always hits a limit of the ability to pay.
Central control of government always over time, favors government.
Central Bank creation of debt (pretending to be money) always hits a limit of the ability to pay.
Central control of money always over time, favors Banks.
Bankers can fool all their customers some of the time.
Bankers can fool some of their customers all of the time. But Banker can not get repaid all the time; then they become the fools. —- Read history of banking.
====== To Big To Succeed ========
====== To Big To Fail. =========
====== Prudential buys Asian piece of AIG this week for $25 Billion. ======
AIG drove straight to bankruptcy. Before our very eyes, US grabbed it. Private Central Bank orders US taxpayer to pay tipsy riverboat gambler bets (Goldman, Morgan, Soc Gen, et al). Taxpayer pays gamblers 100%.
$200 Billion later, Congress (Noun, synonym: progress) investigates without investigators (Noun, homonym: alligators; also see: Warren Commission, Savings and Loan Commission, 911 Commission or “no alligators”).
No trial. Rinse, spin and do it all over again