The research firm expects another sharp increase in foreclosures and defaults over the next few months.“If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” the RealtyTrac president said.
The data shows once again how intractable the housing problem is. Government projects to modify loans have not helped even though these have been backed by a $75 billion loan aid package. Mortgage rates have routinely been below 5%, near historic lows. The government has offered $8,000 credits for first time home buyers.
Despite all of this, high unemployment, worries about job security, and lack of ready credit for homebuyers have undermined any recovery in the housing market. This has been made worse by the perception that home prices will continue to fall. Potential homebuyers doe not want to buy a house this year and find that their new mortgage is underwater next year.
The RealtyTrac numbers are another warning that the housing market will not recovery in 2010 and that the number of mortgages that are worth more than the houses which they bought will continue to go up. That by itself will gridlock home sales for this year and perhaps several more.
Douglas A. McIntyre
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