rssThe Foreclosure Machine Sets Another Record
Wednesday, May 13, 2009 at 9:02 am
- 9 Comments
Foreclosures jumped again in April, setting another record and providing more evidence that the housing crisis shows little sign of slowing down. RealtyTrac, which collects foreclosure data, reported a record 342,000 homes received notices of default, auction sales, or bank repossessions in April. That’s a 32 percent increase over April 2008′s foreclosures. And it means that one in every 374 homes received a foreclosure-related notice.
And that’s not even the worst of it. RealtyTrac Vice President Rick Sharga told CNN Money the continuing high levels of foreclosures are altering the firm’s earlier predictions on the severity of the crisis.
“We had been predicting 3.4 million filings for the year,” he said, “but we’ll blow those numbers out of the water.”
As TWI reported last month, mortgage giants Fannie Mae and Freddie Mac ended their foreclosure moratorium on March 31, which added to the foreclosure spike.
CNN reports that the continuing free fall in housing prices is also contributing.
The loss of home values put many more mortgage borrowers underwater, meaning they owe more on their loans than their homes are worth. That increases foreclosure rates in two ways: Underwater borrowers have no home equity to draw on should to pay for unexpected expenses such as big medical bills or major car or home repairs. That’s makes them more likely to miss payments. And when home values fall far below mortgage balances, homeowners often walk away from their loans.
“There has been much more ‘deed-in-lieu-of foreclosure’ activity lately,” said Sharga. This is a transaction in which borrowers simply tell their banks that they’re not going to pay their mortgage and hand back their keys, and deeds, to their lenders.
“People are making the rational financial decision to walk away from underwater homes,” he said.
It’s not just subprime borrowers who are losing their homes in record numbers anymore; the crisis increasingly is affecting borrowers with prime loans who have lost their jobs or who have seen their home values tank.
Given all this, don’t expect May’s numbers to improve much. As we’ve noted before, nothing seems to stop the foreclosure machine — and today’s news suggests the problem will likely continue to get worse before it gets better.
9 Comments
Comment posted May 13, 2009 @ 7:55 am
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Pingback posted May 13, 2009 @ 10:43 am
[...] housing crisis continues, with yet another record of foreclosures set in April. Both Frannie Mae and Freddy Mac ended their foreclosure moratoriums [...]
Pingback posted May 14, 2009 @ 12:42 pm
[...] Foreclosures jumped again in April, setting another record and providing more evidence that the housing crisis shows little sign of slowing down. RealtyTrac, which collects foreclosure data, reported a record 342,000 homes received notices of default More Foreclosure News [...]
Pingback posted May 14, 2009 @ 9:29 pm
[...] Foreclosures jumped again in April, setting another record and providing more evidence that the housing crisis shows little sign of slowing down. RealtyTrac, which collects foreclosure data, reported a record 342,000 homes received notices of default More Foreclosure News [...]
Pingback posted May 17, 2009 @ 4:08 pm
[...] Foreclosures jumped again in April, setting another record and providing more evidence that the housing crisis shows little sign of slowing down. RealtyTrac, which collects foreclosure data, reported a record 342,000 homes received notices of default More Foreclosure News [...]
Pingback posted May 20, 2009 @ 1:51 am
[...] Foreclosures jumped again in April, setting another record and providing more evidence that the housing crisis shows little sign of slowing down. RealtyTrac, which collects foreclosure data, reported a record 342,000 homes received notices of default More Foreclosure News [...]
Comment posted May 22, 2009 @ 2:33 am
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to see if you qualify. I was also in trouble and I am glad I did check it before I talk to my mortgage company and it helped – John Mayer, California
Comment posted June 8, 2009 @ 1:45 pm
The Government housing assistance is a joke or a boon. There isn't any government oversight/ guidance on the banks or mortgage companines. They will modify a loan as little as possible for a home owner to gain the government stipend. This may be as little as a 1% change from the exsisting loan. The bank/ mortgage company benefits twice– from the home owner and the government. The banks/ mortgage companies can slow roll the loan payment and place it in suspense so they can have it default and gain the government/ taxpapyer bailout money, criminal. No oversight once again, let the banks do as they please so the taxpayer can bail them out and ruin our kids future with an insurmountable national debt.
Comment posted June 8, 2009 @ 8:45 pm
The Government housing assistance is a joke or a boon. There isn't any government oversight/ guidance on the banks or mortgage companines. They will modify a loan as little as possible for a home owner to gain the government stipend. This may be as little as a 1% change from the exsisting loan. The bank/ mortgage company benefits twice– from the home owner and the government. The banks/ mortgage companies can slow roll the loan payment and place it in suspense so they can have it default and gain the government/ taxpapyer bailout money, criminal. No oversight once again, let the banks do as they please so the taxpayer can bail them out and ruin our kids future with an insurmountable national debt.
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