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Foreclosures Point to a Housing Double-Dip

Written By Brian Hicks

Posted February 11, 2010


 double dip

Even though the financial bug has moved on to other places like Greece and Dubai it is worth noting that the housing market is still in a downward spiral of its own.

In fact, at this point a double-dip in housing seems a near certainty—-especially given the wave of foreclosures that will hit the market this Spring….

From Bloomberg by Dan Levy entitled: U.S. Foreclosure Filings Top 300,000 for 11th Month

“U.S. foreclosure filings rose 15 percent in January from a year earlier and exceeded 300,000 for the 11th consecutive month as modification programs failed to keep delinquent borrowers in their homes, RealtyTrac Inc. said.

A total of 315,716 properties received a notice of default, auction or bank seizure last month, or one in 409 households, the Irvine, California-based seller of default data said today in a statement. Filings fell 10 percent from December.

Bank seizures, also known as real-estate-owned or REOs, may rise to a record 3 million this year, RealtyTrac said last month. About 66,000 delinquent loans out of a targeted 4 million by 2012 were permanently modified as of Dec. 31 under the Obama administration’s Home Affordable Modification Program, according to the Treasury Department. About 787,000 mortgages are in trial programs that change loan terms, the Treasury said Jan. 19.

“It’s almost inevitable that modifications will fail,” Michelle Meyer, New York-based U.S. economist for Barclays Capital Inc., said in an interview. “Over the next several months, we should see REOs increase at an accelerated pace.”

Foreclosure filings also fell in January of last year from December, only to rise in subsequent months, RealtyTrac said.

“If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement.

Unemployment and negative equity, where homeowners owe more than their properties are worth, are adding to the foreclosure total, said Stan Humphries, chief economist at More than a fifth of U.S. homeowners had negative equity in the fourth quarter, the Seattle-based real estate data provider said yesterday in a report.

“It’s tough to come up with a program that works for unemployment-related foreclosures where the owner can’t pay, or for rate resets where the owner is way underwater,” Rick Sharga, RealtyTrac’s executive vice president for marketing, said in an interview yesterday.”


Looks like it’s make or break time again for housing. 

Related Articles:

FHA Defaults: Many More on the Horizon

Mortgage Delinquencies a Set New Record

The Brewing Trouble at the FHA

Pinto: The FHA Needs a $54 Billion Bailout

Underwater Mortgages Drive the Next Foreclosure Wave

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