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The Foreclosure Tide Turns

Posted by: Chris Palmeri on December 19, 2007

Interest rate cuts, borrower-friendly legislation, President Bush and even Alan Greenspan stumping for homeowner debt relief. Could all of this actually be slowing the foreclosure tide?


The latest numbers from Web site RealyTrac show that foreclosure filings fell 10% between October and November, the first major decline in more than a year. The filings—which include everything from people receiving notices they’re late on their payments to actual seizures of homes by banks—were still up an eye-popping 68% from November of last year. And the big number, 201,000 filings, still means that one out of every 617 households in the country is in some form of distress.
But moves such as Governor Arnold Schwarzenegger getting four big lenders in California to freeze rates for subprime borrowers with adjustable mortgages could actually be working. Despite the state’s size and sky-high home prices, California’s foreclosure activity fell 21% month-over-month. That was a much better peformance than the rest of the nation. Go Arnold, Go

Reader Comments

Jim D

December 19, 2007 3:14 PM

If I was behind on my mortgage this month, I'd do anything I could to get one more payment together, hoping for a bailout.

Too bad I'd be wrong, of course.

But that's indeed one explanation.

Next year is going to suck.

CA dave

December 19, 2007 5:51 PM

Is it working? I guess it depends on your definition of "working". If a lender gives someone a temporary reprieve, most data indicates that the borrower will still default but will do it later. So, does anybody win? You could argue that it's a more orderly retreat but it screws the lenders now (lower return on investment) and eventually has the same result. Very few individuals are in a temporary position of unaffordability. Those who are will benefit. The majority are simply in property that they can't afford.


December 20, 2007 10:45 AM

There are roles in which governments need to play, eg. in setting up infrastructure and general legal framework for markets to function fairly. But what Bush proposes (to freeze rates and rescue the small subset of subprime borrowers from foreclosures) is not one of them. It's a wrong move. If those subprime loans were drawn due to misinformation or deceit from lenders, then it should be settled legally. But rescuing the borrowers financially simply because they go in with their eyes wide open and now they cry help, is not going to help to market weed out what are not supposed to be done in the first place. These borrowers, who should NOT have been granted a loan in the first place, are being told that, it's ok if they fail, since the government is going to bail them out. It's ironic and totally hypocritical, of how Bush (a GOP no less) is backing his "ownership nation" claim.


December 20, 2007 4:23 PM

Well know come spring. Seasonality is too great to tell.


December 20, 2007 7:09 PM

Of course it fell! It's a wave. Each reset is processed by owners, and the ones that get shaken out, get shaken out - the rest are fine for the moment. But then the next reset hits, and you get a spike and decline again.

None of which mean ANYTHING about the long term trend of the market. (Which I would argue will go down until the resets we know are coming are processed)


December 22, 2007 5:29 AM

hopefully the government can help out.

Kevin Comerford

December 28, 2007 9:23 AM

You guys who are whining knew you couldn't afford the homes when you bought them. I'm here in my 900 SF condo because I knew I couldn't afford to bid against you and I should be rewarded through buying your foreclosed home, not the other way around.


March 14, 2008 5:27 PM

trying to get list of foreclosur in the delware county

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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