Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

Experts are changing their analysys over the foreclosures situation

Since the time of the crash the industry watchers and experts have been giving out warnings about a second flood of foreclosures. But now they are reviewing their predictions.

Jim Summers of Re/MAX Golden Empire said, “Like everyone else, I’ve been waiting, but we’re not seeing the big influx that was expected. At this point, I wouldn’t bank on anything.” His views are echoed by many other pundits who are now saying that it is unclear when the second wave will hit the shores.

It is to nobody’s interest to see thousands of foreclosures entering the real estate market and further push down prices. Both the public and private entities have joined hands firmly to avoid this. This was the view of the director of Casden Real Estate Economics Forecast of Lusk Center for Real Estate (University of Southern California). Conway said, “As long as interest rates stay low, I think banking and government interests will be able to maintain some degree of market stability.”

The federal government definitely does not want another downward pressure on the economy. The banks do not care to see their assets go for a tumble again. The cities are dead against another round of blight – line after line of derelict foreclosed houses left to crumble and decay while inviting criminals and vagabonds.

Looking at the status of the market it is clear that foreclosures never took a rest. But a massive attack seems not to have materialized. It happened in Kern County when foreclosures doubled from last January to August. Foreclosure postings during the first 9 months of this year have decreased by 14% from what it was in 2008. The numbers fell from 6,827 to 5,858 as per the findings of Kern County Assessor. In Kern County the staggering unemployment rate is 14.3%.

This optimism holds despite the knowledge that landmines buried deep below the real estate coverings could explode any moment. The option ARM, the most exotic of the mortgages are about to reset to higher rates. These were freely distributed during the time of the housing boom.

Option ARM initially allowed borrowers low payments but with the passage of time these increase dramatically by two or three times of the original loan. California has been one of the largest recipients of these loans. 2007 was the last year when many of these loans were contracted. As per schedule these should start resetting from 2010 and continue well into 2012.

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