Posted on 08/18/2009 2:05:02 AM PDT by Steelfish
Jobless spike compounds foreclosure crisis Economists estimate 1.8 million borrowers will lose their homes this year
Aug 17, 2009
WASHINGTON - The country's growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.
Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody's Economy.com.
And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.
"It's a much harder nut to crack, unemployment," said Mark A. Calabria, director of financial regulation studies at the Cato Institute. "It's much easier to bash lenders than to create jobs."
During the first three months of this year, the largest share of foreclosures shifted from subprime loans to prime loans, according to the Mortgage Bankers Association. The change to prime loans -- traditionally considered safer -- reflects the growing numbers of unemployed who are being caught up in the foreclosure process, economists say.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has proposed using $2 billion in government rescue funding to provide emergency loans to these borrowers.
"We are going to be seeing more foreclosures because of prolonged unemployment," he said. "These are people who weren't in trouble and wouldn't be in trouble if they hadn't lost their job."
(Excerpt) Read more at msnbc.msn.com ...
The next slide is starting and will accelerate mid Sept. from what I am reading / seeing. The $trillion debt added so far this year has dine little other than pay off Dem cronies.
I see hope and change works real well.
77 banks failures so far this year. Another 305 in the cross hairs and the commercial real estate foreclosure mess will start mid Sept. as the SRM will no longer be able to ignore the story.
Barney Frank.
He dug an economic hole that darn near collapsed the global economy.
We had to pay for a bunch of people and shovels to try to backfill that hole and he claimed no culpability.
Now he wants to dig another friggen hole and is asking for a backhoe to dig it with.
I believe that Mayor Curley is in awe.
Bailing people out financially is unconstitutional, it’s flat out communism!!
No point in loaning money to people who can’t pay off the original loan.
[The next slide is starting and will accelerate mid Sept. from what I am reading / seeing. The $trillion debt added so far this year has dine little other than pay off Dem cronies.]
I do both Commercial and Residential Real Estate. The residential shadow inventory if huge and growing from what I can tell (a lot is obfuscated by banks not wanting to mark to market and go bankrupt). You can’t get a commercial loan for an acquisition, and rolling over is impossible too. I’m guessing we haven’t seen anything yet compared to the hurt that is coming. I’m hoping it can wait till October, so I get get some money out of Dodge.
Several homeowners working still paying their mortgages (on time) on properties that are now upside down.
Bottom line: no equity and the TARP banks refuse to wrote down all these loans.
Regional banks too are in the same boat as commercial real estate defaults are beginning to accelerate.
As a country, we have approximately 7 million out of work since Nov '08 and layoffs are still occurring at a monthly rate of 300-350K at least.
The goobermint isn't letting on to the billions all over the country from state and local pension funds that provided the cash for all the refi's from 2005 - mid 2008 as junior lenders thru commercial real estate investment groups...i.e. the hedge funds and it is short term loans 5 - 8 years on average.
A lot of the commercial real estate is in the overbuilt condos, apartments and strip malls and those properties will most like see a 40% devaluation on average before it's all over.
Retail sales have pulled back significantly as many independent stores have folded.
It ain't looking good, at all and explains a lot of the reason why the federal goobermint wants Crap and Tax and ZeroCare so quickly as a means to rake in the dough as it's gonna be needed.
It's an amazing shell game the slice and dice mortgage CDS, CDO & associated derivatives game has been played. All the profits were taken up front.
The world will not rush to invest here any time soon. We will see nations with real money come in and pick up lots of property at 50 cents on the dollar after the 40% devaluations have occurred.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.