Foreclosure Freeze Beginning to Thaw

April 15, 2009 No Comments »

thaw

Completed foreclosures hit another record high last month, with 175,199 homes lost to foreclosure, up 44 percent from February’s record numbers, according to Foreclosures.com.

A record 370,000 homes have been repossessed by banks and mortgage lenders this year, up more than 38 percent from the 266,986 seen in the fourth quarter and 76 percent from the 210,280 in the first quarter of 2008.

Pre-foreclosure filing also reached a quarterly high, topping 600,000 for the first time since the mortgage crisis began a few years back.

Unfortunately, it looks as if those foreclosure moratoria did little but delay a growing problem, even with record low mortgage rates and the Making Home Affordable program now in place.

“The floodgates of foreclosure opened with the expiration of these foreclosure freezes,” said Alexis McGee of Foreclosures.com, in a release. “With rising unemployment, a backlog of delayed foreclosures and increasing abandonment of properties, foreclosures soared in March to levels we have not seen in this crisis.”

“Hopefully, this is a short-term surge caused by months of delayed foreclosures. This is a very troubling turn after seeing some bright spots earlier this year,” McGee added.  “However, with Obama’s new Making Homes Affordable Plan now in effect we are hoping that in the near future we will see a reduction in new pre-foreclosure filings, which will help stabilize the housing markets.”

Unfortunately, that program leaves out a number of borrowers, including those with jumbo loans and private-label mortgages, who seem to be the most in need of assistance, according to certain data.

“March’s high numbers may also be caused by defaults on previously modified loans. Earlier this month the Office of the Comptroller of the Currency and the Office of Thrift Supervision reported higher and rising re-default rates on modified mortgages as part of their fourth-quarter 2008 report,” she added.

With a flood of foreclosures expected to hit the market, along with the existing shadow inventory, it looks as if home prices still have a long way to fall.

And bank earnings, which may look strong when first quarter numbers are released, could also take a turn for the worse as bad loans are finally written off after some opportune delays.

(photo: d’arcynorman)

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