Help me out here; I am running out of superlatives to describe the foreclosure situation. In April, forclosures were up over 100 percent compared to the same month last year.
Here is another shocker - 8 out of 10 subprime loans have variable interest rates. Sit back in your chair and think about that one for a moment. Lets repeat; eight out of ten loans given to people with bad credit will shortly reset to higher rates. This means just one thing; the US housing market is sitting on a foreclosure time bomb.
May 7 (Bloomberg) -- U.S. homeowners entered the foreclosure process in April at more than double the rate of a year ago as tightening credit made it more difficult to refinance and a swelling supply of unsold homes made it tough to sell.
The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Sacramento-based Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
Eight of 10 subprime loans, given to borrowers with bad or limited credit histories, adjust over time to higher interest rates and many homeowners can no longer afford their mortgages. With existing home sales at a four-year low, it's more difficult to sell because there are so many homes on the market.
Here is another shocker - 8 out of 10 subprime loans have variable interest rates. Sit back in your chair and think about that one for a moment. Lets repeat; eight out of ten loans given to people with bad credit will shortly reset to higher rates. This means just one thing; the US housing market is sitting on a foreclosure time bomb.
May 7 (Bloomberg) -- U.S. homeowners entered the foreclosure process in April at more than double the rate of a year ago as tightening credit made it more difficult to refinance and a swelling supply of unsold homes made it tough to sell.
The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Sacramento-based Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
Eight of 10 subprime loans, given to borrowers with bad or limited credit histories, adjust over time to higher interest rates and many homeowners can no longer afford their mortgages. With existing home sales at a four-year low, it's more difficult to sell because there are so many homes on the market.
Hey! You've won a ride back to the top
2 comments:
Markus Arelius said...
Bloomberg is doing a pretty good job of kicking asses the last 2 to 3 months.
What I would like to see is some more comprehensive case study-like reports from these guys the would explain How Could Anyone Get Into This Mess? We have heads of households with MBAs, heads of companies who signed the dotted line of these mortgages. Did they not know? Who helped convince them? The Realtor? The loan officer/mortgage broker?
Until we understand the chronology of events better, we can't get a grip on it. All we know from media reports today is that "nice people were destroyed".
Well, ok, but how does that just happen?
The truth is more complicated.
Nice people, yes. But they were also ignorant, financially incompetent and greedy. They were led in by unscrupulous realtors that told them "everything would be alright" and "you can just refinance". No one bothered to ask critical questions about what they were doing and why.
Jon said...
This is a mess that didn't have to happen and unfortunately it will only get worse before it gets better. The real problem is people now a days want much more than they can really afford and as long as their are lenders and brokers that will enable them, it will continue to happen. Why would anyone sign a ARM and not plan to sell the house before the adjustment kicks in? It would seem like a no brainer to me.