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Today's Top News
No Letup in Foreclosures
1 million-plus homes apt to be forfeited in 2010
LOS ANGELES - More than 1 million US households will probably lose their homes to foreclosure this year as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.
(photo by Flickr user respres) Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released yesterday by RealtyTrac Inc., a foreclosure listing service.
"That would be unprecedented,'' said Rick Sharga, a senior vice president at RealtyTrac.
Lenders have historically taken over about 100,000 homes a year, Sharga said.
The surge in home repossessions reflects a foreclosure crisis that remains a crippling drag on the housing market, despite having shown signs of leveling off in recent months.
The pace at which homeowners fall behind in payments and enter the foreclosure process has slowed as banks continue to let delinquent borrowers stay longer in their homes, rather than add to the glut of foreclosed properties on the market. At the same time, lenders have stepped up repossessions in an effort to clear out the backlog of distressed inventory on their books.
The number of households facing foreclosure in the first half of the year climbed 8 percent, versus the same period last year, but dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions, and repossessions.
In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 US homes.
Foreclosure notices posted monthly declines in April, May, and June, but Sharga said not to read too much into that.
"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market,'' he said.
On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.
Assuming the US economy does not worsen, Sharga projects it will take lenders through 2013 to resolve the backlog of distressed properties they have on their books right now.
And a new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy does not improve fast enough to lift home sales.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.
"The downward pressure from foreclosures will persist, and prices will be very weak well into 2012,'' said Celia Chen, at Moody's Economy.com.
She projects home prices will fall as much as 6 percent over the next 12 months from where they were in the first quarter.
Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest-growing group of foreclosures.
There are more than 7.3 million home loans in some stage of delinquency, according to Lender Processing Services.
The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem. Over a third of the 1.2 million borrowers who have enrolled in the mortgage modification program have dropped out.
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11 Comments so far
Show AllThis means, in most markets, don't buy a home right now. The price needs to plummet again.
The banks will start to get tired of holding onto decaying properties in about a year, but in the short term they need to make believe that the houses are worth something under the Obama make-believe accounting rules.
So the banks are forced to hang onto the houses and watch while thieves eventually rip the plumbing out of the house walls and the roofs start to leak, rotting the houses out.
Your community really needs to implement an "unoccupied house" property tax surcharge to stop this long-term warehousing of houses, which drives your own property tax values down.
When will these "experts" simply say this is worst time in history of this country including the housing market?
AD
Do you mean to suggest that it is the worst time in your memory. This economy is bad and getting worse but it has yet to match the Great Depression of the 30's. It may, of course, yet become such.
Everyone says it's the economy but nobody says War Economy.
It is funny how how language is always the tool of mass denial.
Correct.
It is just assumed that war will be made, in spite of anything else and this omission is reflected in the hypocrisy and corruption of the language about the American economy.
War does 'not count.' It is so far marginalized on the periphery of the average American's cognition that it simply is not factored in as having a deleterious– directly causal, specifically economic effect– on things outside its discrete parameters.
"Once crime was as solitary as a cry of protest; now it is as universal as science. Yesterday it was put on trial; today it determines the law."
- (Albert Camus)
War is so determinate of the American economy it has become a natural law and taken for granted. Defunding war spending is simply not an option.
When the entire national identity is constitutive of war; when it becomes an organic function, not only of state, but of the collective spirit of the people themselves, it will not change anytime soon.
Does anyone even believe for one moment that the crisis of foreclosures will be mitigated at the expense of military spending or by a generalized debt forgiveness at the expense of finance capital?
It is not merely the corporate media's deliberate choice not to point out the obvious connections between war profligacy and the general immiseration of the populace; the people ignore it, as war is something that MUST be paid for, irregardless of their own situations.
For most Americans, the war expenditures and the attendant security costs are just not part of 'the economy.' They are simply 'built in' to the reality of what America is as something 'apart' from the 'real' economy that they inhabit.
America will choose a 'bomber' economy over a 'booming' economy every time.
In fact, the only 'economy' which now matters is the economy of the elites, whether it is reflected in a permanent war for primitive capitalist accumulation or in the rapacity of the American financial system to steal with impunity, which amounts to the same thing.
There is no longer even the appearance of effort to rectify this disparity in some 'quid pro quo,' because the rate of extortionate profit is now so elevated that the elites are accustomed to it. They have no intentions of becoming a charitable society. But they do desire to become 'Liberals.'
"Fascism is the way to Liberalism." –(Benito Mussolini)
Look up Daly vs First National Bank of Minnesota - he won a case against the bank for trying to foreclose on his home. It was appealed naturally - and judge who ruled in favor of Daly mysteriously died 6 months later while fishing. Autopsy found poison in his blood stream. Still, the legal precedent is there for you to tap into... it's amazing how banks can get away this this, illegally.
www.spoch.org
Contrary to the author's opinion, "Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties."
Lenders want top dollar when selling REO. Hyping "steep" discounts may encourage bargain hunters into the real estate market, but in my experience, steep discounts(to market value) are the exception, not the rule.
Also, "Over a third of the 1.2 million borrowers who have enrolled in the mortgage modification program have dropped out" or more accuratley "FORCED OUT" of consideration.
These loan servicers earn higher fees by keeping loans in default or foreclosure... NOT by extending loan modifications. If loan mods are less profitable for the loan servicer.... it will fabricate reasons to toss folks from loan mod consideration... requiring the borrowers begin the process from scratch.
Loan servicers will ONLY act in their own best financial self intererst... an obvious disconnect between parties' interest.
They're not being sold at steep discounts on Long Island. Some of these houses that are not in great shape where I live a pretty much selling for still above where they should be for what is a working class neighborhood.
One of my neighbors lost their house this week. There was no "for sale" sign on the house. The POD they had gotten was gone this morning. They had furniture out and a TV that had signs that just said "take me." Yesterday I broke down when I saw this.
Last night neighbors who had a "for sale" sign on their house moved out, too. No, the house hasn't been sold and there hasn't even been a "nibble" but they're having to leave. So that makes about four vacant houses in two blocks -- and I'm sure there are a few more.
I should add that others in my neighborhood said this would never happen in this area -- Stony Brook, East Setauket and places like that. It is. I now see three or four homes in a row with "for sale" signs on them from working class patches like mine to upper middle class. Taxes on Long Island, of course, are back-breaking, so even if you're lucky enough to have a home paid off, just paying the taxes is another mortgage, as are the utilities.
So, as I look around while walking or driving I hear Obama's words "We're moving in the right direction." In Obamaland that is probably true -- never look back and always moving in the right direction.
Oh, and NAFTA Bill just bought a multi-million dollar "farm" in my State pf NY
http://www.huffingtonpost.com/2010/07/15/clintons-expected-to-buy_n_647272.html?page=2&show_comment_id=53936823#comment_53936823
The Obamas are in Bar Harbor this weekend. Here's part of a comment on the Clinton buy. I'm sure most of us see it this way:
"And let me tell you, Obama seems to be taking the very same path: vacationing at Martha's vineyard while passing a watered down public option and watered down fin reg."
And you could add so much more to that sentence. I would never begrudge a President a vacation if I felt he gave a damn about the people in this country. But right now the Obama vacations look like a slap in the face.
As a matter of fact, last year during his State Park vacation he was close enough to go to the free clinic that had been set up in Los Angeles. Wendell Potter had even written an open invitation. Obama ignored that and took off time from his vacation to conduct two more of his staged "town hall" meetings. That stung.
Read a vastly superior article, with actual analysis:
http://www.commondreams.org/view/2010/07/11-5
Banks should have many more houses shoved up their backsides - have them try to price fix their way out of that. Underwater borrowers should refuse to pay another penny and sue, there are people in your hometown ripped off by the same loan sharks, join forces with them. In fact, in American history, we see that loan sharks were, at times, considered the worst form of criminal scum imaginable and were "given" unique justice in some of the most barbaric ways.
No help is coming from the Government; the so-called "objective" AP news articles like the one above, essentially obscures any mention of culpability or root cause, which is the exact opposite of objectivity, it's an effort that hides the truth.
This week -
* Goldman walks away with a slap on the wrist
* Financial reform was mostly defeated; a weak effort, written by lobbyists.
I just came from my buddie's " garage sale " in this area of 2.1 million people. The real unemployment rate is 18% and the state ranks 3rd in the nation in foreclosure rate and it is going up. What a sad affair! The people who came to look were like cannibals/vultures. Pieces of furniture and the rest of his stuff was priced at 25 cents on the dollar and he got offered far less than that. Some people even asked him to give the stuff to them and they would pay him $20 for delivery. He was trying to get enough money for a house and car payment. He spent 10 days cleaning, polishing, etc. Hell, he even had free lemonade. He has barely covered his cost and I had to leave: it was just to sick. Screw the banks. My buddy has refused to sell his musical instruments but that's a decision for another time: another sad day for sure. Again, screw the banks and this gov't.
This is part of the gradual transfer of wealth from the poorer parts of society to the richer. It is what historically happens when civilizations cease to grow and instead consume themselves.
It happened in Roman times too; with a gradual movement from a Republican state of smallholding free farmers, with a small aristocracy, to a state in which all the land and property in the vastly expanded empire was held by a few thousand immensely rich families, and the rest of society had become reduced to servitude: serfs on what had once been their own land. Then, when the Roman empire could no longer afford to pay the, by-then, mercenary army, it imploded.
Please reflect.