The Foreclosure Boat Is Drifting But Not Sinking
In the first five months of this year, countless homeowners felt the sting of foreclosures. But foreclosure expert McGee, president of foreclosures.com, suggests that the numbers are confusing. It does not necessarily mean that the national economy is floundering.
The Mortgage Bankers Association echoes these sentiments. Except for a few states, the overall numbers of foreclosures have dropped since the first quarter of 2007. In fact, figures will soon be released showing, that compared to the last ten years, the numbers of foreclosure would have been below the average if it had not been for a large increase in foreclosures in a few states – California, Florida, Nevada, and Arizona.
The first stage in the foreclosure process is the pre-foreclosure filing. A pre-foreclosure filing is a notice that is issued stating that a property is now in foreclosure for a loan that is unpaid. In the second stage, the notice of auction is given fixing the date. In some states like Arizona, these two stages are combined into one. In the third stage, a REO or real-estate/bank has the property handed over to either the new owner or returned to the original borrower if the latter has been able to meet his dues.
McGee stresses that the real villains are the homebuyers that buy homes that they cannot really afford. The hope is that the prices of real estate would rise but, when this did not happen, the reality is harsh. When interest on a house rises, it leaves the homeowner no other alternative but foreclosure. Statistics can be confusing because the same property can account for multiply filings at every stage of the foreclosure process. That is why the per capita analysis of McGee is much more precise.
The rising numbers of foreclosures is indeed sad but it should not lead to mass hysteria all across the nation about national collapse of the economy. This situation will not develop in to anything near the economic crisis that occurred in the 1990’s. These numbers must take into account the many Americans that pay their mortgage payments regularly. 69% of USA citizens live in their own homes, according to a census taken recently. The truth is that foreclosures are only small portions of total US mortgage debts and not everyone, even in the sub-prime zone, defaults. Federal Chairman Bernake agrees with this view.
