Foreclosures Spare Neither The Good Nor Bad Credit Holders

The second quarter saw the entire country breaking an all time record in foreclosures. Both the good and bad credit holders were affected.

Statistics has a language of its own. 5.12% mortgages are in the red with pending dues. 0.65% units are so far gone that foreclosure proceedings have been initiated against them. The net result is that home fires are snuffed out. Three consecutive quarters are shaking the market. There seems to be no hope till the latter part of 2008.

Federal Reserve cuts might ease the tension but the weak economy will trigger of unemployment and cause a housing recession with more people losing their houses.

The picture in Illinois is akin to the national scene with 5.09% having gone into delinquency and 0.63% into foreclosures. Michigan and Ohio in the Midwest is caught in a snarl of unemployment and foreclosures. In California, Florida, Arizona and Nevada the weather is also grim. As a result of past frenetic speculation the prices of real estate have dropped by 10%.

Mortgage lenders without money trickling in from their lending, are now without funds and this will further cause foreclosures to increase. From where will the loan to buy houses come? The worst affected are those seeking jumbo loans and those with shaky credit history. Panicky investors have shied off from mortgage related securities causing the lifeline of the mortgage industry to be cut off.

Many had gone into the mortgage agreement without thinking ahead regarding their ability to meet commitments. Now they cannot refinance the loans and added to this they are having difficulty about selling because new buyers cannot avail of loans. Those within the ARM (adjustable rate mortgages) are worst hit because all on a sudden they are finding monthly dues have more than doubled. Without being able to satisfactorily sell their properties all are affected – both those with good and bad credit histories.

Those with weak credit history have mostly availed of sub-prime loans. Of them 14.82 have gone into delinquency. 2.72% are just beginning to taste the foreclosure process. In Illinois the figures are 2.62% and 15.26% respectively. Some borrowers with good credit past had also availed for sub-prime loans. They too are in deep waters. Countrywide 0.27% units are just in the first stages of foreclosure while 2.73 have gone into delinquencies.

Via

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