Data Suggests Imminent Spike in Foreclosures

[Donnachaidh]

http://news.firedoglake.com/2010/08/31/data-suggests-imminent-spike-in-foreclosures/

This chart showing US home vacancies tells you everything you need to know about the near-term future of the economy. The United States has twice as many vacant homes as the entire housing stock of Canada. The US has ten times more people than Canada, too, but that doesn’t exactly help us think about the problem.

With that much excess supply, prices simply have to fall. And the worst part of this story is that the foreclosure tide, which has been held back temporarily by a few Administration programs, is about to burst. Basically, the failure of the HAMP program to actually modify loan terms is about to lead to a big spike:

What you’re seeing here isn’t subprime dreck: it’s sensibly-underwritten conforming loans which were bought by Fannie and Freddie. Through 2009 and the first half of 2010, the rate at which those loans entered foreclosure proceedings was pretty steady. But as we enter the second half of 2010, there’s a huge spike, especially in the loans which have been delinquent for more than six months.

That spike is loans which entered the HAMP modification process, but then got kicked out, for reasons good or bad. Without a successful permanent HAMP modification, foreclosure comes soon enough.

As homes move out of HAMP and into foreclosure, the amount of distressed real-estate sales will rise, and home prices will of course fall in the effected areas, pushing ever more homeowners into the negative-equity status which is very highly correlated with default risk. And so the vicious cycle continues.

More at the link ---

[county worker]

1. We have all these people offering solutions to the economic problems yet nothing is done!

It is like we are in a stupor or something. I thought the other day what lesson are we supposed to learn from all of this? Is there some cosmic reason why we need to go through a period of pain? Is this supposed to be a shake out of some of us? Is this the thinning of the herd? The economic pie is shrinking and we can't all have our piece anymore.

[Hawkowl]

2. Oh the whole pie is still there

It is just that the top 1% have taken your share. If we want it back we have to TAKE it back, through taxes, regulations, and policy.

[xchrom]

3. American Incompetence - it's our new best characterization. Nt

[TheMuse]

4. The Administration took the wrong approach to the housing crisis

What should have happened is they should have gotten rid of the mortgage exemption to negotiation in bankruptcy.

Also, with the HAMP program, all they did was give another bailout to the banks. The program does nothing to lower the actual debt burden to the homeowner, or bring their mortgage in line with the actual value of the house. All it did was allow banks to keep the mortgage on the books and not have to write it off by lengthening the loan terms, and lowering the interest (which of course was paid for by the government).