According to foreclosure numbers recently released by the Mortgage Bankers Association (MBA), the United States is deep in the worst foreclosure...
According to foreclosure numbers recently released by the Mortgage Bankers Association (MBA), the United States is deep in the worst foreclosure...
View Housing Market Watch RSS feedAccording to foreclosure numbers recently released by the Mortgage Bankers Association (MBA), the United States is deep in the worst foreclosure crisis it has faced in its history. Over 14% of subprime borrowers are defaulting, and now it appears that many prime borrowers are beginning to follow suit.
| Metro Area | % Homes in Foreclosure | % Change from 2006 |
|---|---|---|
| Stockton, CA | 3.7% | +256% |
| Detroit, MI | 3.4% | +99% |
| Las Vegas, NV | 3.2% | +142% |
| Riverside, CA | 3.0% | +198% |
| Sacramento, CA | 2.7% | +241% |
| Denver, CO | 2.3% | +11% |
| Miami, FL | 2.2% | +74% |
| Bakersfield, CA | 2.1% | +222% |
| Memphis, TN | 2.0% | +17% |
| Cleveland, OH | 2.0% | +106% |
Source: RealtyTrac
From January to June of 2007, foreclosure rates increased considerably in the nation's largest 100 MSAs. In the ten metro areas that are shown in the chart above, at least one foreclosure was filed for every 50 households.
According to a recent survey by the Mortgage Bankers Association, the crisis in foreclosures keeps deepening. States like California, Florida, Nevada, Arizona, Ohio, Michigan, and Indiana saw their foreclosure rates skyrocket in the last quarter. This problem is expected to get a lot worse before it starts to better, says the MBA's chief economist Doug Duncan.
'We will see delinquencies and foreclosures rising for another quarter or so. Home prices are falling as rates reset higher, making it difficult to refinance,' said Duncan in a conference call with Bloomberg.com.
The problem lies mainly with subprime borrowers, as they continue to default in ever-increasing numbers. In the third quarter of 2007, 14.82 percent of subprime borrowers had gotten behind on their loans, as compared to the 2.6 percent of prime loans more than 30 days past due.
According to the MBA, the 2/28 adjustable rate mortgage is one of the key factors in the foreclosure crisis, as are the depressed economic conditions nationwide. As more ARM resets are expected for this year and next, it is very likely that the foreclosure rate will continue to increase over coming quarters.
Sean O'Toole, founder and CEO of ForeclosureRadar.com, says the crisis will likely be compounded by the large number of speculators who are now folding after buying during the boom.
'Many blame subprime lending... but rampant speculation even by those with great credit played a leading role,' said O'Toole in a press release. He also said that the subprime market took the first hit since those borrowers had the least to lose by walking away, but that current statistics showing that nearly half of foreclosures represent non-owner occupied properties indicate that speculators are walking away too.'
It is certainly true that record numbers of non owner-occupied properties are hitting the auction block. Of the 9,477 properties that were auctioned in California last month, 44.3 percent were speculator-owned properties.
Another shocker: 90.3 percent of the homes auctioned had been purchased or refinanced in 2005 or 2006.
Some politicians are in favor of providing assistance to the millions of homeowners who are facing default as a result of poor decision-making and falling home prices. Others are dead set against it. Let's see where the American people stand.
An open letter to all of the lawmakers and taxpayers who think a mortgage bailout is what we need to solve the housing crisis.
To get borrowers to leave a house--and leave it in good condition--mortgage lenders around the nation have begun offering cash for keys. Some lenders are paying out upwards of $3,000.
Democrats unveiled a new plan last week that will allow the FHA to buy $300 billion in delinquent, underwater mortgages. The initial cost to taxpayers is estimated to be $20 billion.
The worst housing slump since the Great Depression is prompting all manner of new bailout plans. Fed Chairman Ben Bernanke encourages banks to forgive portions of mortgage debt, the Democrats propose using billions in federal dollars on buying up bad loans, and the Bush Administration is prepared to dump bank losses on the taxpayers' shoulders.
Should mortgage borrowers at risk of losing their home be given a bailout? What about lenders who face lost profits? Four recent polls ask Americans where they stand on these issues.
Many people may be losing their homes to foreclosure because of legitimate financial crises, but there are even more people losing their homes because of lender follies as well as their own greed and stupidity. Here are five stories in particular that will be sure to induce fits of eye-rolling.
If you have followed the news at all over the last few months, then you know that the public has been spoon fed a spate of tearjerker news stories that are meant to paint struggling mortgage borrowers as victims. These stories talk about the importance of staving off foreclosures and helping people who need it, but they very rarely touch on the truth of the matter: most mortgage borrowers were reckless and do not deserved to be rescued.
A new poll conducted by the National Taxpayers Union shows that Americans have varying opinions on proposed plans to bail out subprime borrowers. Survey respondents weighed in on whether or not government intervention is necessary and who would benefit most from a taxpayer-funded bailout.