New wave of defaults on horizon, experts say
Friday, August 7th, 2009 Bank Wrongs by DaveVW“Four years after the housing downturn began, prices in San Diego County and much of the rest of the country are beginning to inch up again. And, locally, at least, there are fewer foreclosures than there were last year.
So are we finally hitting bottom in the housing market? Don’t bet on it. So far, the nation’s banks, which have been given billions of dollars over the past year under the idea that they’ll use the money to help stabilize the economy, still seem to be reluctant to modify the terms of the loans they’ve made.
A report last week by the Government Accountability Office showed that the nation may be little more than halfway through the foreclosures emanating from the housing bubble. And now, real estate experts say, we’re about to be hit with another wave of foreclosures, because many homeowners who have been laid off or furloughed during the recession can no longer pay their bills.
“There will be absolutely no shortage of foreclosures going forward,” said Bruce Norris, head of the Norris Group, a real estate investment firm in Riverside. As of March 31, the GAO says, 1.6 million of the homes that were purchased with risky subprime or Alt-A loans between 2000 and 2007 have been foreclosed upon.
About 1 million more of those mortgages are either “seriously delinquent,” meaning more than 90 days past due, or already in the foreclosure process. An additional 4 million or so have not yet been refinanced or paid off.
“As a result, hundreds of thousands of additional nonprime borrowers are at risk of losing their homes in the near future,” the report warned. And that doesn’t take into account the foreclosures that will likely take place as a result of layoffs and furloughs.”
