Wednesday, October 22, 2008

Foreclosures to Continue

Between the Option ARMs recasting and the increasing number of job losses it looks like the foreclosure numbers will continue on their upward ascent. How many more months of breaking records do we have to look forward to? Well we have at least a year to find out! Remember there are some records that we do not want to break - and this is another one. Foreclosures have devastating consequences - on the families, on communities, and on our society. And the Mortgage Bankers Association states the numbers will continue. Just take a look at this post from Marketwatch titled Job losses could fuel foreclosure problem: MBA projects negative economic growth until mid-2009, another hit to housing. Lets take a look at the grim projections -

If 2008 was a record year for mortgages entering foreclosure, 2009 could look even worse: While home-price declines have been driving foreclosure starts recently, mounting job losses could add another layer of stress on American homeowners, the chief economist of the Mortgage Bankers Association said on Tuesday.

A recession appears to be underway, according to the MBA's annual economic forecast, which projects negative economic growth through the middle of next year. The MBA presented its forecast to reporters Tuesday at its annual convention, being held in San Francisco.

"We have been consistently setting records for new foreclosures and loans in foreclosure," Jay Brinkmann [chief economist of the MBA] said. The slowing economy could cause that trend to continue.

"We expect to see more than 2 million foreclosures this year," said Steve Preston, secretary of the U.S. Department of Housing and Urban Development. Preston addressed the industry group in a speech on Tuesday morning. For perspective: "That's roughly a third of the five and half or six million homes that are likely to be sold this year in our country."

"We receive consistent feedback from borrowers and counselors that servicers don't have the authority to help them or that loan-modification qualifications are so rigid that many people that can be helped are falling through the cracks," Preston said.
More people falling through the cracks - and with job losses the cracks are just getting bigger and bigger. As much as we do not want a Foreclosure Response Plan - it does seem like good foresight to be prepared. We are all in a position that no one wants to be in. We are breaking records that we would not like to see. This is where real leaders step up - make hard choices that will inevitably be unpopular - but it is our best interest.

Like the credit crunch - which choice was worse - investing to fix the problem or letting it takes its course? Almost all economist agreed (on both sides of the political spectrum) doing nothing was the worst possible choice. Unfortunately the same thing applies to the foreclosure problem - doing nothing is an option, and probably the worst possible option.

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