The large amount of housing foreclosures has been a huge drain on the U.S. economy. People can’t avoid the black hole when they are losing their jobs, and seeing their sub-prime mortgages skyrocket.
According to a recent L.A. Times article dated July 4, 2009, mortgage defaults have surged to record levels amid rising unemployment and falling home prices. Lenders are expected to move quickly to clear up backlogs as moratoriums on foreclosures expire.
Government and company reports both show that the number of completed foreclosures nationwide slowed sharply late last year and into early this year, largely because of various moratoriums in effect during much of the first quarter.
But anecdotal reports indicate that foreclosure sales have started to climb again in the second quarter. It appears that the pipeline is clearly getting fuller.
In the first quarter, some 1.8 million homeowners nationwide fell behind on their loans by 60 to 90 days, a 15% increase from the prior quarter, according to Moody’s Economy.com. The research firm said that loan defaults rose sharply as well, to 844,000 in the first three months of this year.
California accounts for an astonishing share of mortgage loan defaults. A whopping 135,431 homeowners in the state were hit with notices of default in the first quarter, an increase of 11% from the earlier peak in the second quarter of 2008, according to real estate information service MDA DataQuick. Foreclosure sales in the state have been moderating after averaging a high of 26,500 a month last summer.
In some communities such as Stockton, Calif., where the real estate market has been among the hardest hit in the nation with home prices plunging 60% in the last two years, many people are expecting a large increase in foreclosures.
Sales of foreclosed houses soared last year as investors and first-time home buyers swarmed over what were considered bargain houses. This year it’s been unusually quiet, says Jerry Abbott, a broker and co-owner of Grupe Real Estate in Stockton. That doesn’t make sense, he said, because he sees many houses in foreclosure in the city.
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