Learn to swim, the third wave is coming!

Real Estate Agent with RE/MAX Hometown

Economists call rising delinquencies and foreclosures among prime borrowers the third wave foreclosures. The first two waves were do to housing speculation and subprime borrowers -- borrowers that had taken out some sort of short term, stated income, or adjustable rate mortgage with lower credit scores.

In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners -- those previously "safe" borrowers with sound credit who have conservative, fixed rate mortgages are getting into trouble at an alarming rate.

In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%. For the first time in the housing crisis, these homeowners accounted for the largest share of new foreclosures.

With the current unemployment rates nationwide rising and California leading the way, it only stands to reason that we better know how to surf or swim, the wave is coming.     

Comments (6)

Nannette Hilliard
Exit Professional Real Estate - Monroe, WI

I agree. We have hardly touched what we are going to see.

Jun 03, 2009 11:30 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Throw in those modifications that are re-defaulting--some projections place the number as high as 75% due to personal debt loads and rising unemployment--and you have the makings of a disaster.  Few seem to be paying heed, but the prospects for a recovery in the short term seem nil.  Even in the long term we probably won't see a recovery to pre-crisis numbers for decades.

Jun 03, 2009 11:42 AM
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate


The number of short sales in increasing so rapidly in our market that I'm concerned about who's going to be left to buy them.

Jun 03, 2009 11:46 AM
Gordon Sloan
Group1 Real Estate, selling houses in Salt Lake City Utah - Salt Lake City, UT
Salt Lake Homes For Sale, Salt Lake Real Estate

Mark, I fear you are correct.

The market has changed from an up the staircase market to a down the staircase mkt.

Jun 03, 2009 11:58 AM
Arthur Buhrer MLO 114080
Arthur Buhrer, Olympic Mortgage Services CL 1456034 - Sequim, WA
Owner Broker/ Washington State

It would be interestring to see how this is playing out in Oct of 09? Have you heard about the wave of options arms still yet to come?

Oct 02, 2009 05:26 PM
Elvin Lorenzo
Blogger and Observer - Hayward, CA

my biggest beef right now is early defaults - home loans we funded and default within the first year.  some of it has to do with their work cutting back hours or laying people off altogether.  there are a lot of great first time homebuyers out there that would love to buy and would be great homeowners but are scared of losing their job.


Feb 04, 2010 12:14 PM