The Coming Foreclosure Flood

The bottom line: just counting the homeowners who are currently behind on their mortgages, along with the existing number of foreclosures for
sale, at the current pace it will take nearly three years to sell all
the foreclosures out there. That doesn't include all the borrowers who
haven't fallen behind yet but are going to, because of unemployment or
because their Option ARM payments are spiking up or because they just
decide to stop paying.

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.”

I have to admit that the foreclosure stats in Florida are extremely high. Some of the towns here in Florida have the highest foreclosure rates in the country. For about 80 grand or much less in some cases you can get a house with 3-4 bedrooms, 2 car garage, central AC and all the bells and whistles and a screened in swimming pool and a 1/4 acre land. That is because in many bank owned houses the banks will sell it for just what the forclosed owner owed on it. Very good for a buyer and very bad for the forclosed owner. And the market is so flooded with these forclosure homes that regular home sellers can't get a decent price for selling their home. I don't see any leveling off yet in sight. Worked out great for me buying a home here, but I feel bad for the people losing their homes or trying to sell their homes themselves to keep from losing them...

The job situation in Florida is grim, and people paid very high prices awhile back to get these houses and now are losing them to foreclosure, having to find a place to live, pay rent or live with relatives, or even end up homeless and start from scratch. In my town there are street after street of vacant forclosed homes, lots of house breakins into those vacant houses, lots of senseless vandalism and it is very grim. I feel so bad for people, it is a sad sad situation. I am lucky and live in the country just out of the town, so no vacant houses around me, my neighbors are woods..., but it I was surrounded by a lot of empty houses I would not feel very safe. A lot of vacant houses soon become grow houses and drug dens, and it is scary. I pray for anyone who by no fault of their own fall on circumstances where they lose their homes and I that the universe that I am not one of them.

A lot of people got into trouble because of the lending institutions because they were approving mortgages for people who really should not have gotten them because it was over their means to pay but the lenders were just pushing through all the loans, often fudging figures and telling potential homebuyers to lie to get the loans. That is just not right. Once again financial institutions are messing with peoples lives. Now they are all wa wa wa because people can't keep up with the payments, yet they caused their own problems....

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Replies

Vagelis4VP February 27, 2010 at 2:01pm

its sad...but this shakeout is a chance for many people to wake up, from their brainwashed reality...
its bad, but probably things will get worse...
Marique February 27, 2010 at 5:19am

I have to admit that the foreclosure stats in Florida are extremely high. Some of the towns here in Florida have the highest foreclosure rates in the country. For about 80 grand or much less in some cases you can get a house with 3-4 bedrooms, 2 car garage, central AC and all the bells and whistles and a screened in swimming pool and a 1/4 acre land. That is because in many bank owned houses the banks will sell it for just what the forclosed owner owed on it. Very good for a buyer and very bad for the forclosed owner. And the market is so flooded with these forclosure homes that regular home sellers can't get a decent price for selling their home. I don't see any leveling off yet in sight. Worked out great for me buying a home here, but I feel bad for the people losing their homes or trying to sell their homes themselves to keep from losing them...

The job situation in Florida is grim, and people paid very high prices awhile back to get these houses and now are losing them to foreclosure, having to find a place to live, pay rent or live with relatives, or even end up homeless and start from scratch. In my town there are street after street of vacant forclosed homes, lots of house breakins into those vacant houses, lots of senseless vandalism and it is very grim. I feel so bad for people, it is a sad sad situation. I am lucky and live in the country just out of the town, so no vacant houses around me, my neighbors are woods..., but it I was surrounded by a lot of empty houses I would not feel very safe. A lot of vacant houses soon become grow houses and drug dens, and it is scary. I pray for anyone who by no fault of their own fall on circumstances where they lose their homes and I that the universe that I am not one of them.

A lot of people got into trouble because of the lending institutions because they were approving mortgages for people who really should not have gotten them because it was over their means to pay but the lenders were just pushing through all the loans, often fudging figures and telling potential homebuyers to lie to get the loans. That is just not right. Once again financial institutions are messing with peoples lives. Now they are all wa wa wa because people can't keep up with the payments, yet they caused their own problems....

This reply was deleted.

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