In 2006, the housing boom in the US began to cool down and increasing foreclosed news has dominated the media ever since. Many of today’s homeowner’s (maybe as much as 10% of them) simply cannot keep up with their payments.
In cities where subprime mortgages are prevalent, foreclosure of homes also became widespread. MS Foreclosure for 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 secondary sign involved previous borrowers with expired introductory interest rates resulting to keeping up with a higher rate and the third one, which is currently beginning to build up, are the people holding prime mortgages and who have lost their jobs due to the economic meltdown and are now unable to pay on their mortgages. Most of them even have good credit ratings. Unemployment is now forecast to impact about 60 percent of all of the mortgage defaults. Basically, more foreclosure news is expected to arrive this year.
According to an analysis made by New York Times in February 2009 (data provided by First American Core Logic), the number of prime mortgages that have delinquent payments exceeded 1.5 million with loans totaling to $224 billion. 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. All of these foreclosures have also dramatically impacted Wall Street and mortgage bonds. These also lead to bank loses of hundreds of billions. (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. The effects of this plan are expected to be felt in the next coming months. Until that time comes, you will need to brace for the storm and all of the foreclosure news that is still looming out there.