In cities where subprime mortgages are prevalent, foreclosure of homes also became widespread.  MS Foreclosure are just one example. Unfortunately this has led to a decrease in home values as well which just adds fuel to the fire.  Additionally, state and most local governments were forced to cut back on their spending because the drop in the value of these properties sharply decreased their tax bases.

There were 3 different foreclosure signs that were observed by people involved in the market.  First was the bailing out of property owners due to the plummeting prices of real estate.  The second sign was all of the sub-prime loans and adjustable rate mortgages beginning to implode.  Lastly, the third sign has been the fact that even prime rate loan holders are losing their homes now due to job loss and the economic crisis.  Most of them even have good credit ratings.  Unemployment is now forecast to impact about 60 percent of all of the mortgage defaults.  Basically, more foreclosure news is expected to arrive this year.

The New York Times stated in February of 2009 that there are more than 1.5 million prime mortgages alone with delinquent payments (data by First American Core Logic).  On the same month, delinquencies on subprime mortgages reached 1.65 million while the Alt-A loans rose to 836,000.  Shockingly over $717 billion in bad loans were on the books for February – up over 60 percent from the same time period a year ago.  These foreclosures spelled catastrophe for Wall Street due to the mortgage bonds that they are securitizing.  Not to mention the hundreds of billions of dollars that the banking industry has lost. (Note: Search on ‘forecloser‘ as well because it is a very common miss-spelling of foreclosure and is prevalent in the foreclosure news posts.)

The new Obama administration has announced a plan to try and help as many as four million homeowners via a $75 billion dollar spending bill.  Unfortunately it may take months before anything ever comes of the plan and for many that will be too late.  Until then, we should brace ourselves for more foreclosure news that is looming in the neighborhood.

Related posts:

1. Homebuyers Attracted by the Rise in Listings of Bank Foreclosures
2. MS Foreclosures – New Program to Deal with Increasing Bank Foreclosure Properties
3. Mortgage Approval Rates Grow 4%