Foreclosures Continue to Surge in February
Despite the various governmental and other measures foreclosures continue to surge in February 2009. It is a spike of 30% from what it was in the same month in 2008.
Lenders too have imposed moratoriums on foreclosures but this does not seem to have reduced the number of foreclosure postings. The number of borrowers facing foreclosure increased by 30% from the levels of the previous year according to RealtyTrac.
Across the country about 291,000 units received at least one notice related to the foreclosure process. It showed an increase of 6% from January this year. Foreclosures are highly concentrated in two states – Florida and California. It is also spreading to other states like Idaho, Illinois as well as Oregon as the economy of USA continues to slide. Rich Sharga of ReatlyTrac said, “It doesn’t bode well. At least for the foreseeable future, it’s going to continue to be pretty ugly.”
Foreclosures have spiked although mortgage giants like Fannie Mae and Freddie Mac as well as other jumbo banks like JPMorgan Chase, Morgan Stanley, Citigroup and also Bank of America have temporarily halted foreclosure proceedings. They did so ahead of President Obama’s release of ambitious plans to tackle the foreclosure crisis that was launched recently. In New York and Florida the temporary hold on foreclosures have been lifted and this has caused numbers to rise sharply. Other states like Michigan are enacting legislation to allow for borrowers facing foreclosure to enjoy a grace period of 90 days to get their finances stabilized.
While foreclosures march on, the banks have stopped including their repossessed properties in sales list for the time being. RealtyTrac noted that there were about 700,000 bank-repossessed units across the country resulting in a “shadow inventory.” This could cause the housing crisis to drag on for more time than anticipated. Rick Sharga commented, “It’s going to take us longer than you might anticipate to burn through he inventory of distressed properties.”
The results show up the challenges that Obama and his economic advisors are facing. The Obama plan is targeting help to 9 million homeowners. It is hoped that they will continue to stay in their homes after refinancing or modifying their loans.
But the foreclosure contagion is spreading. About 12% of those with mortgages in America counting to 5.4 million are at least a month behind in their mortgage payments as per the findings of Mortgage Bankers Association.
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