In 2006, the housing boom in the US began to cool down and increasing foreclosed news has dominated the media ever since.  Homeowners began to lose their homes or are threatened with foreclosures because they have failed to keep up with the payments on their mortgage.

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.  Add to that the fact that local government spending has also been cut way back because this decrease in home values has also resulted in a decrease in property taxes and their annual budgets.

There were signs of this coming however, three of them in fact.  First was the bailing out of property owners due to the plummeting prices of real estate.  The secondary sign involved previous borrowers with expired introductory interest rates resulting to keeping up with a higher rate and the third one, which is currently beginning to build up, are the people holding prime mortgages and who have lost their jobs due to the economic meltdown and are now unable to pay on their mortgages.  Most of them even have good credit ratings.  It is expected that unemployment would contribute to almost 60 percent of mortgage defaults.  Unfortunately, this means that even more foreclosure news will be heard through the rest of this year.

According to an analysis made by New York Times in February 2009 (data provided by First American Core Logic), the number of prime mortgages that have delinquent payments exceeded 1.5 million with loans totaling to $224 billion.  On the same month, delinquencies on subprime mortgages reached 1.65 million while the Alt-A loans rose to 836,000.  In all, a total of $717 billion worth of loans were recorded in February – this is an increase of 60 percent from last year.  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 Obama administration announced in February that they will be spending $75 billion to save as much as four million homeowners from foreclosures through mortgage incentives and reduced payments.  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.

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