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US 2009 Foreclosures Shatter Record Despite Aid
NEW YORK - U.S. foreclosure actions shattered all records in 2009 and will do so again this year, with unemployment and wage cuts overcoming programs to remedy failing home loans, RealtyTrac said on Thursday.
Rev. Jesse Jackson carries a sign during a demonstration against home foreclosures in front of the Federal Reserve Bank in 2009 in San Francisco, California.
(AFP/Getty Images/File/Justin Sullivan) A record 2.8 million properties with a mortgage got a foreclosure notice last year, jumping 21 percent from 2008 and 120 percent from 2007, the Irvine, California-based real estate data company found.
The loan failure rate -- and thus the fallout for home prices and the economy -- would have been even worse without foreclosure prevention programs and loan processing delays caused by sheer volume, the company said.
In many cases loan fixes don't stick, however, and so a new record of at least 3 million properties getting a filing is seen in 2010. Filings include notice of default, auction sale or bank repossession.
State, federal and private efforts to modify loan terms for at-risk borrowers either don't go far enough or are expanding too late to help many struggling homeowners on a permanent basis, many industry experts and economists agree.
"Until the lenders start to get into principal balance reduction you're going to continue to see high redefault rates," Rick Sharga, senior vice president at RealtyTrac, said in an interview.
"We haven't seen any appetite for that on the part of the lenders yet," he added.
One in every 45 households got at least one filing last year, a rate almost four times that of 2006.
On a quarterly basis, foreclosure activity did slow in the fourth quarter, declining 7 percent from the third, but rose 18 percent from the fourth quarter of 2008.
With unemployment surpassing 10 percent at the end of last year and many homeowners coping with wage cuts, timely mortgage payments got more challenging.
A foreclosure notice usually follows a pink slip by three to six months. This should ensure that even under the best case scenario there will be a high level of unemployment-related foreclosures throughout this year, Sharga said.
Refinancing to lower monthly costs was also out of the question for many homeowners because the value of their house fell below the size of their mortgage.
Despite some recent improvement, prices have toppled nearly 30 percent from their peak in 2006 through October, according to Standard & Poor's/Case-Shiller indexes.
Yale University economist Robert Shiller, a creator of the S&P/Case-Shiller home prices index, told Reuters on Tuesday he expects renewed price erosion in coming months.
Foreclosure notices were made on more than 349,000 properties in December, a 14 percent jump from November despite various moratoria, RealtyTrac said. It was the tenth straight month that notices topped 300,000, driving the year's total to a record of more than 3.9 million.
Nevada had the highest foreclosure rate for the third straight year, with more than 10 percent of households with loans getting at least one notice. Arizona and Florida were in second and third places. California, Utah, Idaho, Georgia, Michigan, Illinois and Colorado were the other states with loan failure rates among the 10 highest for U.S. states.
California, Florida, Arizona and Illinois accounted for more than half of all foreclosure actions in 2009 as more than 1.4 million properties got a notice.
BANKS SEEN HOLDING FIRE
Banks repossessed a record of more than 918,000 properties last year, 6.5 percent more than in 2008.
The pace at which banks start selling these houses is critical for gauging how much further home prices will fall.
Banks have half a million houses on their books yet to be put on the market, RealtyTrac said. There's another million properties in foreclosure and 5.5 million delinquent loans.
"The doomsday prognostications say that gives you 7 million properties that are all going to go back to the banks, that are all going to hit the market at the same time and we're going to have a smoking crater where there used to be a real estate market," Sharga said. "We just don't see that as being realistic."
It is widely seen in the best interest of banks, housing market and the economy for the banks to sell the foreclosed homes in a measured way to prevent prices from swooning anew.
"Because of gradual foreclosure bank sales we're looking at a long, slow, flat housing market recovery that probably won't feel much better until about 2013," he said. "But if it means we avoid a double dip in housing then that's probably a good thing."
(Editing by Chizu Nomiyama)
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32 Comments so far
Show AllToo Big To Fail? BS : Bush Shadow (Obama*)! The Bernanksters' and Wall Street-walkers'
obscene bonuses need a permanent X-SIZE TAX; their depraved daily
profit-raping of US, too!! *Remember, come the elections; Neither
Are YOU!!! We, the People are Too Big to FAIL.
Many of the 2009 lay offs won't be counted in the unemployment statistics until 2010:
Rather than handing out severence pay in a lump sum to laid of employees, many companies kept their laid off workwers on the payroll and paid them severence until it ran out.
Rather than file for unemployment insurance (UI) in 2009 when they were actually laid off, many of thse people will file in 2010.
On top of everything else, we have the seasonal retail sales jobs that may have kept *REAL* unemployment numbers down during the fourth quarter. Now many if not most of these jobs are gone.
January's unemployment stats., no matter how doctored, may prove quite depressing.
kw
Economy is booming. Time for record bonuses. With all these foreclosures suicide rates must go up, so let's bundle life insurances to death swaps. This will drive up bonuses even more and reduce population pressure. Change (cash) we can believe in.
However, somebody out there must be writing the new "Grapes of Wrath".
Obama, Congress and the Federal Reserve will keep printing unemployment checks and food stamps to keep bonus armies, mass migrations and other 1932 events from reocurring. If mass migrations erupt or millions of people show up in DC to protest, Obama and Congress might have to take meaningful action to improve the US economy rather than simply handing out corporate welfare to their campaign contributors.
...or the Neo "Decline and Fall"...
This jumped out at me: >>Foreclosure notices were made on more than 349,000 properties in December,<<
345 THOUSAND families in danger of losing their homes. In ONE month. Some probably will, especially as this government refuses to provide any real aid directly to the homeowner.
More people living in their SUVs I suppose. Or in shelters. Or on the street.
Ridiculous situation. Let Fannie and Freddie Macs offer ZERO interest loans to families in danger of foreclosure. NOW! At least for a few years to get their feet under them. Then a really low-cost mortgage.
Gary
Last Monday I heard a radio interview with Dennis Kucinich. He said that this last Christmas Eve, congress voted to raise the cap on loans offered by Fannie and Freddie Mac.
Kucinich is worried for two reasons:
1 - the timing of the vote is questionable.
2 - the 'Macs' could become a 'back-door' dumping ground for toxic mortgages/loans. An accounting trick used to move them from private to public books.
Kucinich was being diplomatic. They voted to give the MAC's unlimited funds till I think 2013. That's taxpayer money, our money of course.
Congress is the best little whore house in America.
This sure sounds like the perfect dumping ground for the trillions in toxic bank assets still being hidden from us so they can reap maassive profits.
Massive collusion from Versailles on the Potomac.
I believe most homeowners who receive foreclosures eventually lose their homes
This touches at the heart of the issue of Capitalism and Private property. Millions are homeless and sleeping in streets, yet the banks hold on to hundreds of thousands of homes that remain empty.
If the banks release the homes for sale, then house prices drop further meaning millions more hold mortgages greater then the price of their own homes.
This same thing happened in California during the depression with food. People were starving (And there are studies done that show some 6 million starved to death during Americas great depression) while the farmers produced an abundance of food. The farmers poisoned and burned the food because "Giving it away" would further erode prices causing their own businesses to fail.
Exxon was capping Gas wells inside the USA when the prices started to plummet so that they could create an artificial shortage and force prices up again.
The US Timber industry laid of tens of thousands of workers so as to create an artifical shortage in Lumber thus forcing prices up. When Canadian lumber started to replace the higher priced US Lumbers, they called for tariffs against the same.
Capitalism does not create wealth folks. It one great con game wherein the prices of goods are MANIPULATED and where artificial shortages and surpluses are created at will by those controlling resources and or property in order to maximize their profits.
When people go hungry as food is deliberately poisoned or when people sleep in shelters or under bridges as homes remain empty , or when folk cannot afford to pay the fuel to heat their homes as a Corporation hoards it to drive up prices , it should become apparent to ANYONE that something is seriously wrong with "the System".
Besides the empty foreclosed houses, let's not forget the vacation homes that sit empty 50 weeks out of a year. The players that run this game Gw speaks of, have homes scattered across the country and world. It is immoral and unconscionable to hold them in reserve for weekend get-aways. But conscience doesn't enter their minds. They make the rules of the game they are winning and proud.
Capitalism is a disease that must be stamped out like the plague. Your very lives and the lives of your descendents depend on it.
"Exxon was capping Gas wells inside the USA when the prices started to plummet so that they could create an artificial shortage and force prices up again."
"...or when folk cannot afford to pay the fuel to heat their homes as a Corporation hoards it to drive up prices..."
Have you noticed that the price of gasoline at the pump is a dollar or more per gallon higher than it was one year ago? "Experts" say the price jump is due to commodity speculators. It seems that Wall Street never fails to find as many angles from which to simultaneously screw us as are numerically possibe. Gives a whole new context to the term "multi-tasking."
Thank you Mr Bush for saving our country from terrorist. You might have saved it from terrorism by decimated its economy with no or low chance of survival.
Now I am not sure which is better death by terrorism or death by economic depression.
Bu$h didn't save us from anything! Remember, 9/11 occurred on this motherfucker's watch. All he succeeded in doing was destroying our economy, destroying our Consititution, destroying our international reputation, all the while taking almost every liberty that made the country what it is purported to be. Bin Laden would be proud were he able to achieve even a portion of that deestruction.
>>Bin Laden would be proud were he able to achieve even a portion of that deestruction. (sic)<<
He's grinning in his beard right now I'll bet.
Gary
only three comments on the Haiti story and four times as many on this one-- but we have it hundred times as good as Haiti with or without an earthquake.
Oligarchy is slavery.
Socialize necessities, privatize luxuries.
Cicero: "Freedom is participation in power."
It's time to hold the feet of the very rich and super rich over the bonfires they've made of our economy and our military. Time for a military DRAFT to draft in the brats of the rich. Time for a national boycott of the big banks. TIME TO ORGANIZE A TOUGH NATIONAL PROGRESSIVE MOVEMENT BEHIND A PROGRESSIVE UNITY PARTY.
time for a general strike.
Banks repossessed a record of more than 918,000 properties last year, 6.5 percent more than in 2008.
I'm just curious, but aren't the Wall Street bonuses about 6.5 percent GREATER this year than in 2008.
Coincidence?
Add up all those bonuses and see if they would have covered all the mortgage payments needed to avoid any foreclosures.
Get it?
The more I read about the economy in the U.S. the more I'm convinced the real shit hasn't hit the real fan yet.
As was once said, You can take that to the bank.
"The doomsday prognostications say that gives you 7 million properties that are all going to go back to the banks, that are all going to hit the market at the same time and we're going to have a smoking crater where there used to be a real estate market," Sharga said. "We just don't see that as being realistic."
Wanna bet on that, Mr. Sharga? What about when all these millions of houses are not occupied for months/years and start to grow mold, deteriorate or be stripped by looters? Then what? Are the banks going to pay to have them bulldozed? Build another McMansion and start the bidding wars again?
What about when everyone realizes they've been had? That the house they paid 2007 prices for is only worth 1998 prices? That if you have a smaller, less ostentatious house, you actually have money left over for other things? That a smaller house is cheaper to furnish, heat and cool and has lower taxes, too?
Can we PLEASE get onto a Zeitgeist type economy? I think capitalism has proved it's too based on greed to continue.
Hey everybody! Stop paying your mortgages AND your credit card bills! You didn't get a vote on the bailout, you might have voted for change but that's not working; how about withdrawing your support in the only way that will truly work! And we can stop paying taxes too, since that's just going to support idiots in Congress (except a few like Kucinich) and to bomb innocent people in Afghanistan!
Only a true revolt will stop these criminals. If nonviolent doesn't do it, it will only be worse in the end.
'Too Big To Fail' is a fallacy. One thing that humans know about ourselves, is that a job that must be done, will be done. So, if the banks had failed, any of their important functions would have been taken over by government (national or local) or by new players in the financial market.
No person willing to pay interest and no one with an asset to use would be left without someone to profit from them.
However, the bailout has been tried. Far better to have used a fraction of that money in legalising the black economy so that small start-up businesses could expand with new and relevant industries. This would lead to quicker employment expansion as sole traders take on partners, employ juniors and experienced seniors, seek premises and expand.
Thousands of tiny, needed businesses growing are more dynamic than a few dinosaur firms being encouraged to stay irrelevant and uncompetitive.
And when the second, bigger financial tsunami comes, the Credit Card Crunch will make the Credit Crunch feel like a tiny splash. Just how many people are paying mortgage bills and even credit card bills with credit cards
Foreclosures? You ain't seen nothing yet!
Aid? What aid? Wall Street did well, thank you...Main Street is still trying to figure out how to survive. Change, Mr. Obama? What change? Appointing the same bottom feeders to run the financial world is NOT help! What a letdown.
ricg writes:
"The more I read about the economy in the U.S. the more I'm convinced the real shit hasn't hit the real fan yet."
Just the most succinct statement of the pessimism expressed by so many on this thread.
Interesting how in the past couple of days Obama and Geithner have both turned on the Populism spigot, saying they intend to recoup the public money from the banks.
Saloo297 writes:
"Now I am not sure which is better death by terrorism or death by economic depression."
I'll take "death by terrorism." Ignorance is Bliss.
-30-
Adler's got a lot of this, but the story's worse than stated. Almost all aid has gone to lenders, not to borrowers. The lenders, therefore, have had reduced motive to negotiate with borrowers.
Since the program was designed by lenders and implemented by people whose candidacy they had funded, we may assume this was completely by design, and that nothing more than token support for homeowners will come.
In fact, given that other economies will likely recover before the US, which continues its "free market" hallucinations in tandem with its deficit spending, we may expect government to protect the landlord class by facilitating the sale of lands to internationals and foreigners.
The IMF and World Bank have left a bloody trail of precedents.
I hope the US more resembles Thatcher's England, where a social net and relatively civilized property laws allowed for considerable squatting in response. But I fear it more resembles Pinochet's Chile, with its faith in cruelty and coercion and the extensive influence of an "intelligence community" greatly vested in the interests of transnationals.
When will holders of government debt foreclose on Uncle Sam?
How about the pentagon living comfortably in its bunkers all over the world with no foreclosure in sight?
Hopefully, you will outlive the demise of unbridled capitalism.