Wednesday, June 10, 2009

One million foreclosures in 2009...and counting

$1 millon mattress missing
The Center For Responsible Lending projects 2.4 million foreclosure starts in 2009, including 1 million already completed. Foreclosure fallout will reduce property values of some 70 million nearby households a total of $502 billion, or about $7,200 per family, according to CRL.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - The nation has suffered 1 million foreclosures already this year and, with more than a million to come before year's end, the decline in home prices may be far from over.

The Center for Responsible Lending says the one million homes lost to foreclosure come with more bad news -- 12 percent of all mortgages are now delinquent, the highest level since the Mortgage Bankers Association started the measurement 37 years ago.

"The escalation of foreclosures on all types of loans is alarming," said Michael Calhoun, President of CRL.

CRL says there's a new foreclosure every 13 seconds in America.

"It's easy to think, 'Well, that's tough luck for the families that lose their homes.' The truth is that foreclosures are costing neighboring families hundreds of billions of dollars and dragging down the entire economy. Foreclosures started today's crisis, and foreclosures will keep the crisis going if this epidemic continues."

CRL projects 2.4 million foreclosure starts in 2009. Foreclosure fallout will reduce property values of some 70 million nearby households a total of $502 billion, or about $7,200 per family, according to CRL.

CRL says to expect at least 9 million foreclosures through 2012, costing 92 million neighboring families $1.9 trillion in lost home value.

CRL isn't alone spreading the doom and gloom.

With federal stress tests indicating a fall in housing prices of 41 to 48 percent from 2006 through 2010, Robert J. Shiller, professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC recently predicted the three year fall in prices could be just the beginning.

"Even if there is a quick end to the recession, the housing market's poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997," writes Shiller in a recent New York Times editorial.

The one bright spot in CRL's report points to the Obama Administration's provisions for stronger incentives for mortgage lenders to improve repairs on existing mortgages.

"The mortgage industry's track record so far shows that loan modifications are not likely to succeed with superficial fixes that fail to lower a homeowner's monthly payments,"
the CRL reports.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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