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Md. Foreclosure Rate Jumps 80 Percent Since 2009

By
Services for Real Estate Pros with USHUD.com

According to new reports, home foreclosures in Maryland have gone up 80 percent compared to this time last April.

In February, Heavy Hammer Inc., and USHUD.com predicted a doubling of real estate foreclosure rates in 2010. As we're seeing, a confluence of factors driven by financial industry practices and changing government policies and regulations continue to exacerbate an already devastated housing market.

The first and most obvious factor is the unemployment rate that continues to languish in the 10 percent range nationally, and often much higher regionally. Similar unemployment rates have historically affected 20 to 30 percent of home owners’ ability to make their scheduled mortgage payments.

The second factor is the significant constriction of lending due to tightening mortgage requirements. The mortgage pendulum is now swinging too far to the opposite spectrum of what we saw at the height of the real estate market. Lending institutions are creating hurdles so high that it will put qualified homebuyers back six to 12 months in the buying cycle.

Struggling homeowners who seek loan modifications are increasingly experiencing difficulties qualifying for programs that could stave off foreclosure. The current qualifications are so absurd they require the home owner to prove that they do not need a modification in order to get one. Even the administration has announced new, stricter documentation requirements beginning June 1 for its Making Home Affordable program, which has seen underwhelming results since its inception last March.

The National Association of Realtors just released a study that finds the average U.S. home depreciated 12 percent year-over-year from 2008 through 2009. As widespread depreciation continues, selling will become an impossible proposition for a growing number of underwater homeowners. 

As I have argued previously, health care reform, while important, was a damaging distraction at a time when government should have been focused on righting the economy by addressing underlying factors including unemployment and the housing crisis. The bottom line is we won’t come close to reaching a recovery until the unemployment figures improve. Unless our leadership in Washington can address the true underlying causes of the recession, housing being key among those, the poor and middle class will continue to suffer and there will be no economic recovery.

 

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Comments (1)

David Obbee
Obbee.com - Agoura Hills, CA

Michael: I think we may see further depreciation as banks unload more foreclosed properties on the market over the next year or so, too.  Forewarned is forearmed, I suppose.  Thank you for sharing.

Apr 27, 2010 02:52 AM