Foreclosures Update
According to a release on INMAN News on Friday loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said today.
Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes — and less incentive to keep up on their mortgage payments, said MBA Chief Economist Doug Duncan.
That’s particularly the case in states such as California, Florida, Nevada and Arizona, where overbuilding created surplus inventories that will take some time to work through, Duncan said. The rate of foreclosure starts in Florida more than tripled between the fourth quarter of 2006 and the fourth quarter of 2007, and more than doubled in California. According to Duncan if there’s any good news in the latest numbers, it’s that there’s been little growth in the rate of foreclosure starts in Midwestern rust-belt states such as Michigan, Ohio and Indiana, where different factors are in play. Job losses and outmigration, rather than overbuilding, have contributed to the decline in demand in those states.
While millions of ARM borrowers still face interest-rate resets the impact of those payment adjustments will be less than feared because cuts in short-term interest rates made by the Federal Reserve have also brought down the six-month LIBOR rate, the index used for many subprime ARM loans, by 2.5 percent since last September.
By the way, did you guys see the new website look for INMAN News? Much cleaner and more professional. I like it!
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Hopefully the lowered rates will keep a few homeowners from facing foreclosure due to resetting ARMs. Unfortunately, the lower rates are causing a general drop in the value of the dollar, with corresponding increases in food and energy prices. Homeowners will need some sort of relief to be able to keep up. An increased mortgage payment, higher food prices, and transportation costs would certainly make the situation much worse than it is now.
Hopefully this cut in interest rates will assist when the next ARMS tset. They definatly have time to consider selling if they see they are not going to be able to afford the bump. They have alot to learn from those in the past 6 months who have done the same. Economic growth in an area has alot to do with recovery of this lending crisis. Job loss and jobs in general will also drive the market unless you are retired and looking for a retirement house.
Seems like all the boom in many areas has caused the median price home to be higher than an professional in a middle income can afford and thats just not right.
I like to see the home values go down and move in a slower up and down process and people will know when it’s best to buy and sell.
People just need to ride it out when home values are down and they will go up again. When you buy anything else it depreciates and you loose value why do you think different in a house. The market allows for those good times to sell and that is what you wait for in a house and foreclosure is when you loose a job with none on the horizon or illness and job loss not a Option ARM coming due and costing more.
I am not in favor or industry bailout. The made there money let them take the loss and reset those homes at a lower value.
In our area we have 7 schools closing in one county and that speaks to people have not only foreclosed buy they moved out of the area.
I think it is so hard to find a job that pays enough to purchase a median price home. That was until recently and now I see house values down and purchasing homes is reduced and interest rates good and if you qualify this is a great time to buy.
I have do believe this area will rebound but things like shool closures are making people as nervous as the media doom and gloom reports. I hope people will look thru all the reports and meet with a lender and see in there case is it a viable option and then start the house search.
Wow, 7 schools closing in your county! That’s definitely a bad sign. I can’t remember is all of my 33 years ever hearing about a school closing in my area because of people moving away. Daytona will rebound, hang in there.
They have definately seem to have over built on condos. Not many people buying them yet the houses seem to always sell. I think the developers over estimated the condo in todays market.
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