The number of new foreclosure loans backed by Fannie Mae and Freddie Mac increased dramatically from May to June. According to figures released by LPS Applied Analytics, a firm that tracks data on mortgages, the number of foreclosures initiated on loans backed by the mortgage giants rose 21 percent from a month earlier. These figures are the result of the large number of borrowers with troubled home loans that failed to get a permanent home loan modification. After borrowers exhaust every remedy possible to make it affordable to stay in their home, they often give up; this results in a growing number of foreclosures.
However, there was some good news from LPS Applied Analytics, the number of home loans in default or in some stage of the foreclosure process dropped in June. LPS reported on July 26th that the number of loans in trouble of foreclosure or in default nationwide was 4.56 million. While the number decreased for the month of June, the nation is still in bad shape. According to Moody’s Analytics, nearly 25 percent of all mortgage loans are at least three months delinquent or in foreclosure.
Much of this has to do with the large number of mortgage borrowers that are underwater on their home loans. According to CoreLogic, roughly 25 percent of all homeowners in America are underwater on their home loan. Because of this, there was recently a sharp increase in the number of strategic defaults, in which a borrower walks away from their home intentionally because of the financial losses involved with trying to find a way to stay in the home. They would rather damage their credit than deplete their savings in what they consider a fruitless endeavor.
The federal government’s loan modification programs have so far done little to ebb the tide of foreclosures that are hitting the market. The newest incentive program to offer cash to banks that approve short sales has increased the number of short sales that have hit the market, however, that just adds to the ever growing inventory which will inevitably bring down home prices. Foreclosures, defaults, and short sales are going to be detrimental to our home prices over the next year.
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Yeah, unfortunately I think we still have a really long way to go before we start seeing the housing market stabilize, let alone going back up. I think whenever strategic defaults come up, it is important to note that this is something very common in the business world.
Same in Marbella we have hit the bottom but god knows how long it will be before people start buying again. All we have at present is bargain hunters looking for bargains that dont exisit
Sad but true. Buyers moving from devastated markets think sellers everywhere should accept any offer no matter how low the offer is. It’s just not that way here in Columbia County Georgia. There are some great buys but our property values did pretty well the past 2 years.
Many people lost their homes because of foreclosures and the pending sales ratio has been increased in the year 2010. I hope the real estate market will overcome the situation in the near future.
I agree with Columbia. It is all due to the conditions arises in the real estate market. Hope it will recover in the next few months or year.
Is it dangerous to purchase a foreclosed home? I bet it would save a lot of money in the long run though – how do you find out about these kinds of deals?
Usually local real estate professionals can give you a list in a certain area. I’ve found that short sales take entirely too long and most of the time the bank is unreasonable with their “offering”. Its unfortunate that there is a lack of motivation.