Housing Bust Comes Roaring Back, Worse Than Ever

[Crewleader]

April 20, 2009

Here It Comes Again!

Housing Bust Comes Roaring Back, Worse Than Ever

By MIKE WHITNEY

Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program -- a combination of mortgage modifications and refinancing -- a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes. But it's clear now that the program will fall well-short of its objective. (Legislation for cram-downs, that is, allowing judges to reduce the face-value of the mortgage, is still bogged-down in Congress. Most economists believe that cramdowns are the only way to keep people from abandoning their homes when they are underwater on their loans.)

In March, housing prices fell faster than anytime in the last two years. Trend-lines are now steeper than ever before, nearly perpendicular. Housing prices are not falling, they're crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 million more foreclosures between now and 2011. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There's nothing Obama can do to make them stay. Worse still, only 30 per cent of foreclosures have been relisted for sale suggesting major hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

Here's a excerpt from the SF Gate explaining the mystery:

"Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory." ("Banks aren't Selling Many Foreclosed Homes" SF Gate)


http://www.counterpunch.org/

[louis-t]

1. "Where have the houses gone?"

The banks are sitting on them with the electricity shut off waiting for mold to grow. Sheeeesh! Banks need to start agreeing to short sales. Fast.

[Crewleader]

4. Here is what is happening in my county

Houses go fast at foreclosure auction
Sales move property for fraction of market price


TITUSVILLE -- In fewer than 45 minutes, almost 60 houses, condos and small businesses were lost.
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"Once, twice, three times. Sold to the plaintiff for $100."

It was a mantra repeated every 45 seconds. Just another weekly foreclosure auction for Brevard County.

Contrary to popular belief, lenders can't just repossess a home when an owner stops paying the mortgage. The lender first has to file a foreclosure lawsuit.

If the lender wins, the judge orders the property sold at auction.

Proceeds go to pay off the loan. If there's money left, the foreclosed owner gets it.

Among the bidders: lenders themselves. Lenders typically bid up to the amount they're owed to protect their investment.

http://www.floridatoday.com/apps/pbcs.dll/article?AID=2009904190315

[Hello_Kitty]

2. Thousands of houses sit empty while people are living in fucking tents.

Outrageous. How about putting people who have lost homes in them so at least the houses aren't sitting empty just waiting to be vandalized.

[edhopper]

3. The number I heard

is there are 20 million empty homes in the country.

[izquierdista]

5. My anecdote

I put in a bid on a house last week, below what the bank was asking, but still better than half of what they had loaned on it 2 years ago. I'm still waiting to hear an echo it has been so quiet. From my point of view, banks are just sitting on empty houses, letting time and the elements take their course. Want to see into their future? Check out that new offering on the History Channel, "10,000 years after man" -- we are already in year 2.