Is it possible that 10 million foreclosures could hit the market in the next 2-3yrs?
According to some experts, not only is it possible... the final numbers could be much higher.
Mike Colpitts, editor of Realtytrac's Housing Predictor writes..."10 million homeowners will be foreclosed through 2012 as more mortgage holders are unable to refinance their mortgages because of falling home values or give up at the prospect of holding on to their homes all together."
Consider the following:
- The Mortgage Bankers Association reports that about 12% of all US mortgages are currently facing foreclosure.
- It is believed that in addition, there is a "shadow inventory" of approximately 600,000 homes that have been repossessed but not listed for sale yet.
- 2009 set a record for mortgage defaults with 3.9 million. That is up from 3.2 million in 2008.
- 16 million homeowners are upside down on their mortgages. This prevents them from selling and encourages some homeowners to walk away from their mortgages.
- The next wave of foreclosures will be homeowners with adjustable rate mortgages (ARM). Estimates have put the dollar value of ARMs at $2.5 trillion. Many people chose ARMs due to the low initial interest rates. They believed that they could sell their homes before the rates adjusted.
- In addition to the ARMs resetting, we are starting to see an increase in defaults in the high end market, as well as from buyers with good credit and conventional loans.
- According to Realtytrac, "One of out three Americans surveyed say that if home values continue to fall they'll walk away from their mortgages, which could set up a worst case scenario for the U.S. economy, triggering an economic calamity."
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