Despite Drop in Foreclosure and Default Numbers Caution is Urged
Despite drop in foreclosures and defaults during January, experts are urging caution. It is being referred to as a “false dawn” that will be followed by a flood. With increase in interest rates and timid economic recovery more and more homeowners will start to lag behind their mortgage payments.
In January this year there were 986 foreclosures showing a drop of 34.9% from December 2009 and 10.9% fall from January 2009. Since May this has been the lowest foreclosure number. The default notices, it being the first step in the process, was 1,741 in January this year, showing a drop of 7.3% from last December and 38% drop from January 2009. Since November 2008 this has been the lowest default number.
Generally lesser defaults should mean lesser foreclosures indicating the worst bite of the housing bust has become history. But pundits are not willing to categorically state that the housing crisis is over. Andrew LePage of DataQuick said, “There’s a lot of distress stacking up outside the formal foreclosure process. It’s anybody’s guess when some or most of it will flush through the foreclosure process.”
Similar numbers had been reported earlier by ForeclosureRadar.com. Its CEO Sean O’Toole commented that the lenders are purposefully slowing foreclosures and defaults responding to the urging by the government to do so. All out efforts are being made to keep the people in the houses that are their homes. O’Toole said, “In the longer term we’re leaving people stuck in a prison of debt, and with high housing debt comes an inability of people to spend, which I think is hobbling our economy. So I think we’re trading one thing for another.”
In January the foreclosure rate continued to be 31 on each day and default about double that figure. Comparatively it was 7 foreclosures and 344 defaults in 2005 January.
Dave McDonald a mortgage broker said that he was concerned about a recent report noting that 10% of all the mortgages on residential houses in America had become delinquent towards the end of 2009. There is the possibility that this proportion would increase in the near future. He said, “I’m more negative as far as the outlook for the housing market goes.”
In downtown San Diego the workers and developers of the construction industry staged a rally to highlight their problems. The banks who had doled out toxic loans are now no longer giving new loans for people to build houses. One of the speakers was Mick Pattinson. He has founded Building Industry Coalition for Economic Recovery. He said, “The bottom line is these hypocrites who run these banks want it both ways. They want to play by the regulations and rules when it suits them, and when it doesn’t they want to crawl off to Congress.”
