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New wave of foreclosures

Posted on: 21st Nov, 2009 01:13 pm
the headline the other day read as follows: New wave of foreclosures looms.

don't you just love to arise and find that on the front page of the money section? i know it made my day. i am quoting from the November 19 edition of USA Today here. the article goes on to say that the wave is "poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices."

we have heard from many corners that we've crossed the threshold and that prices are beginning to make a comeback. however, if the forecast for this "wave" of foreclosures is correct, that comeback will be short-lived.

there are approximately 7 million properties that are likely to go to foreclosure in the coming months. why haven't we seen these already? well, the answer to that is multifaceted.

lenders have been far more willing to try to work with consumers to avoid foreclosure and provide modifications or workout programs to stressed borrowers. and, of course, the time lag that exists in working out modifications or any other such plans, plus the delays in the short sale area, have pushed back action.

and we've been saying this for quite some time: lenders are overwhelmed with entreaties from borrowers for assistance. as they deal with each individual request, that stalls the foreclosure process. as they determine that some borrowers are simply past the point of no return, it's already been months before the foreclosure process can begin.

it's estimated that closet to 2.4 million homes will be lost in 2010 to foreclosures, short sales and deeds in lieu of foreclosure. this is an increase over what we've seen in 2009 (about 2 million).

it's not over, and the effects of what is taking place will have an impact on all of us for quite some time in the future, it appears.
Hi George,

It is true that experts have predicted that a large number of foreclosures will hit the real estate market in the coming months. With the election of Barack Obama as the new President, the US government took steps to stop foreclosure actions and offered various programs to the homeowners so that they can save the property. It was sort of a "temporary ban"(source: "http://www.npr.org/templates/story/story.php?storyId=103143651") on foreclosures. However, most of the major banks and mortgage firms are now planning to life this temporary ban and start the foreclosure proceedings. This will in turn increase the number of foreclosures.
Posted on: 22nd Nov, 2009 09:44 pm
Hi,

I just want to know what is actually a condition now as, does the foreclosures today hitting the real estate as, seriously I want to know the real estate market as, somewhere the conditions are good and this will no doubt will helpful for everyone to know about the situatin as, so many people are going for short sales.


Thanks!
Posted on: 22nd Nov, 2009 10:27 pm
Hi all,

The foreclosure prevention measures like Home Affordable Modification Program, taken by the Obama administration have not been as effective in reality as they look like on paper. It is true such programs have helped a lot of homeowners save their homes. But the number of people in distress far exceeds the number of those who qualified for such programs.

Recently the FHA mortgage insurance reserve fell way below the congress-mandated 2% limit. Many experts blamed the falling real estate prices as a key reason for this record reduction in FHA reserve. With the new wave of foreclosures on the horizon, the real estate prices are all set to go further down, making an immediate recovery of the real estate market a distant possibility. A lot of the adjustable rate mortgages are also set to recast in 2010. It is quite obvious that borrowers, already struggling to stay current on their loans, will find such adjustments too hard to handle. If and when it happens, the real estate and mortgage market scenario can turn even gloomier.
Posted on: 22nd Nov, 2009 11:27 pm
Yes we're yet to experience another round of foreclosures in the mortgage market. There are thousands of Option ARMs which are likely to reset in 2010. Homeowners having taken out such loans are on the verge of losing their homes when the rates/payments rise. Certain states are likely to get hit with foreclosures to a large extent. For example, California homeowners hold 60% of the Option ARMs offered in the US from 2004 to 2008. About 1 Million of these mortgages with reset in next 4 years. This means there'll be a possible rise in payments and hence the foreclosure crisis will deepen. So, the mortgage industry needs to find out a solution to this growing problem or else any sign of housing recovery is likely to disappear in the forthcoming months.
Posted on: 23rd Nov, 2009 05:30 am
George, you would probabaly be a lot happier if you do not read newspapers.
Posted on: 24th Nov, 2009 11:17 am
but i am happy, john. reading newspapers won't affect that either way. and negative news about the mortgage industry, stocks going up or down, "tea parties" taking place ad nauseam...none of that negativity is going to steal my joy.
Posted on: 29th Nov, 2009 07:28 pm
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