Get ready for another big wave of foreclosures arriving as soon as this summer

Posted by: Prashant Gopal on July 6, 2009

The housing market has shown some signs of bottoming, but the next wave of foreclosures could delay any sort of recovery.

The Chicago Tribune had good piece today on another wave of foreclosures that could arrive as soon as this summer. Lenders are now moving ahead with foreclosures that had been delayed by self-imposed and state-government moratoriums that expired in the past few months.

First-time home buyers and investors are responsible for the spike in sales, especially in hard-hit California, Florida, Nevada, and Arizona. But the inventory of bank-owned homes is now likely to grow, putting increasing pressure on already low prices. And the rising unemployment rate will only compound the situation.

“The rapid pace of layoffs is of particular concern,” the Tribune article reads. “Homeowners who have lost jobs have little chance of getting their mortgages modified. That puts many homeowners on a collision course with banks that are preparing to take a more aggressive stance on loan modifications.”

Reader Comments

Tim Hawkins

July 6, 2009 8:35 PM

"... as soon as this summer..." -- guys, its like July already.

Ballbuster

July 7, 2009 3:21 AM

The coming wave of foreclosure is proof that real estate market has not reach bottom despite Gopal's declaration that it had hit bottom several months ago. Having been proven wrong once again, Gopal is desperately searching for a CYA, such as "but the next wave of foreclosures could delay any sort of recovery." Nice try at obfuscation but Gopal is fooling no one. After beating around the bush, Dead-Wrong Gopal needs to confess that the next wave of foreclosures will "delay any sort of recovery" means the housing market is still searching for a bottom. Finally, Gopal needs to admit on the BW record that he is wrong as he jumped the gun in declaring a real estate bottom months ago and now is trying to cover his tracks.

HiNetReturn

July 7, 2009 11:49 AM

In Walk-away states like California and Arizona the jumbo loan wave is coming. People who bought a million dollar home two years ago are now living in a $400,000.00 home with the price likely to go much lower. With them being $600,000.00 underwater and very little penalty they will walk. The bank then takes the loss and they have the finances to walk down the street and pick up a much better house at $450,000.00. When this is all over, there will be no walk away states. There never should have been any. If I were a lender I would not write a single loan in any walk-away state. This would have the effect of forcing the state legislatures to change the laws.

Bassist

July 7, 2009 5:07 PM

The simple lesson here is - Cut your coat according to your size!

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About

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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