Foreclosures and Economic Gloom

Posted in Foreclosure, January 22nd, 2008 |

The experts are sparring about whether a recession is actually on or not. Meanwhile San Bernardino and Riverside Counties stand out as glaring posters of gloom and despair. The headlines have been crying hoarse all through the previous year about increasing foreclosures and sliding real estate markets. All around are skeletons of abandoned houses that had once been homes. No lights blink after dark.

All these indicate that the ailment is not confined to the real market zone. It is just part of a tidal wave that is about to overwhelm the country. The real estate slump has led to job cuts in the construction works and money markets. This is the strong opinion of Thomas Pierce economics professor. There is cause for grave concern that recession is just waiting round the bend. It will touch all and sundry and not just the foreclosure victims who are fighting the waves in the forefront.

Eviction is not just a eight letter word that hands over the keys to the lender. It means families out in the open roaming about for shelter and work. Society and economics cannot wish them away. They will not vanish even after eviction.

Default notices on mortgages rose by 45% across the state in the last month of the preceding year. More than 9,000 units were auctioned during the first working days of January 2008. It was a sure pointer to the worsening of the housing market. The prediction is that San Bernardino and Riverside Counties will suffer a drop of another 15% drop in housing prices and come up at par with Modesto – the worse loser in the nation.

There has been a steady decline in new jobs in the housing sector. Somehow the employment figures of 2007 have been cobbled up but in the current year the cracks will show. The two counties will show job losses instead of the steady increase being shown in the past.

PFF Bancorp had advanced millions of dollars during the housing surge in these two counties but now there is a 21% drop in its stock as shown on Wednesday. Loans are being written off. FBOP a private banking giant is eyeing its take over. Another firm Levitz Furniture declared bankruptcy in November and 158 employees were laid off. Wells Fargo and Morgan Chase are not far behind in bidding farewell to employees – 58 and 91 respectively in one month. The writing is on the wall.