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Posted about 14 years ago

Are Foreclosures an Omen of Even more Problems?

Despite some reports that suggest the housing crisis may be bottoming out, foreclosures to date just represent the “tip of the iceberg,” according to real estate analysts.

Many experts feel that numbers that indicate the appearance of rising home prices and fewer foreclosure auctions are really just illusions.

Government repayment programs and loan modifications make foreclosure numbers appear lower for the time being, but are actually delaying the inevitable inability or disinclination of homeowners in trouble to hang on to property that has dropped by hundreds of thousands of dollars. This is especially true if the decline in value now means that the homeowner owes more than his house is worth.

Many in the business feel that re-defaults on loan modifications are destroying government efforts to solve the mortgage meltdown.

In all likelihood, mortgage delinquencies will continue at a fast pace because:

- The resets of the Arm loans will cause a larger number of foreclosures than the subprime loans did.
- Resets are part of the problem, but a bigger concern is the owners who owe more on their home than it’s worth (under water).
- Commercial loans and credit card losses will soon add to the problem.”
- Unemployment is also a major factor. We will are likely to fall back into recession by the end of 2010, and the unemployment rate could well reach nearly 20% in 2011.”
- Owners are finding it more and more acceptable not to make their house payments..

Here are some late statistics

More than 1 million U.S. homeowners have lost their homes to foreclosure since the end of 2008, according to data just released by the Irvine-based Realty Trac who keeps tabs on such statistics.

About 20% of those foreclosures occurred in California alone, as reported in figures from MDA DataQuick, another tracker of real estate statistical information.

Realty Trac recently released its latest figures for the total number of REO’s, homes repossessed by banks through the foreclosure process because they didn’t sell for the bank’s minimum price at a foreclosure auction.

Nationwide, there were 918,376 REO’s during 2009. That’s up 6.6% from 2008, when 861,664 U.S. homes were lost in foreclosure.

- In January, there were 87,648 REO’s in the United States. That brings the total number of REO’s that have occurred in the United States since 2008 to 1,006,024.

REO’s are just a portion of the total homes lost to foreclosure, because they don’t include homes sold to third parties at foreclosure sales. If nobody bids on a home, or fails to bid at least to the bank’s minimum acceptable price, then the property reverts back to the lender.

DataQuick statistically tracks the actual number of homes in California that owners lost through foreclosure, and their figures do include those sold to third parties:

- In 2009, 190,360 California homes were lost to foreclosure, representing 20.7% of the U.S. REO total. That’s down 19.4% from 2008, when 236,231 California homes were foreclosed.
- In 2008, foreclosures in California amounted to 27.4% of the U.S. REO total.

Original: Are Foreclosures an Omen of Even more Problems?


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