Terry Glenn is a cowgirl

In another sign that the housing market is taking a major tumble, Americans across the country are getting foreclosure notices at a record pace.

New data released this afternoon indicates that one in every 656 homes in the United States went into foreclosure during May.

Irvine, Calif.-based RealtyTrac says more than 176,000 people got foreclosure notices last month. That is the highest figure they have ever recorded in their monthly report and is 90 percent higher than the numbers from a year ago.

"Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year," said James Saccacio, CEO of RealtyTrac, in a release accompanying the data.
Experts say the boom in foreclosure was expected.

Millions of Americans with poor or undocumented credit were given mortgage loans during the height of the housing bubble, and now that their adjustable rates are resetting higher, many face the prospect of losing their homes.
Six of the nation's largest lenders who specialized in these high-risk borrowers filed for bankruptcy earlier this year after investors lost confidence in the $600 billion subprime market when default rates started to rise.
For the past six months economists have been watching the mortgage market closely, attempting to gauge the impact of the shakeout in the subprime mortgage market.

"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. Bernanke has said the downturn in the housing market has shaved 1 percent off the nation's overall economic growth in the past year.

But the shakeout in the market is far from done.

First American CoreLogic analyst Chris Cagan said he believes about 1.1 million Americans will lose their homes to foreclosure in the next seven years because they cannot pay the increasing monthly mortgage bills after a reset.
Banks have started to tighten lending standards, making it harder for subprime borrowers to get a loan, but housing analysts say the damage has already been done. Several years of easy-to-get financing deals attracted many people into the market even though they would not have traditionally qualified for a home loan...

http://abcnews.go.com/Business/Indus...C-RSSFeeds0312

DarrylS

Heard this on the news, it translates to every self owned property in all of the New England States being foreclosed at once.. the other day I picked up the Pro Jo and there were 10 pages of legal notices for foreclosures.. I watch this stuff and the american dream of owning a home will be regulated to a select few.

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sdaniels7114

The banks are finding out that even though they do have the house to fall back on, the value of the house is gutted if its one of millions thrust on the market suddenly. I hope they all pay dearly because this failed experiment of theirs is blowing up in my face too. I've been in and out of the flooring industry for 24 years now and I've never seen it this bad. All people in the construction/remodeling industry are hurting right now and its because of this.

godef

... and the rich get richer...

That's what it all boils down to. Greedy CEOs being paid millions of dollars whether their companies are successful or not (banks included), raising the economic bar by investing these undeserved millions in real estate among other places, thus inflating the cost of homes, making it even more difficult for the common man to experience (what has now become) the American dream of owning a home, forcing them to turn to more exotic means of financing it.

The Rebublicans have a favorite term they like to use... I believe it's "trickle down".

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Patters

The predatory lending that sent housing costs sky high is starting to have the opposite effect, pushing values down and, in effect, trapping people in their overpriced homes. If they can't pay the mortgage, they're screwed. Add to that the respected economists Samuelson and Pearlstein ran columns in the Washington Post expressing deep concerns about overinflated stock prices and rising interest rates.

Since I think that economics is largely psychological, it's hard to say how things will actually play out, but it's clear there are some fundamental problems with our economy being masked by the huge deficit and the illusion that stock valuations that are linked to corporate profits.

Real World

The hurt is dependent on your geographical location. Things around here (NE) are pretty bad right now for sure Sd7. We've (masonry) had a tough start so far this year. Calls are down dramatically from past years. The NE area was one of the first regions in the country to experience a dramatic rise in the cost of housing, and therefore is one of the first to feel the cyclical pain. The biggest problem with the housing bubble is subprime lenders. The vast majority of delinquent borrowers are subprimers. My buddy worked in that field for one of the major SP's and quit after 6 months because of how unethical the practice was. He would tell me every night about how workers there were screwing naive borrowers into higher rate, 2nd mortgages, or overreporting income so as to secure a higher limit of financing. Well, when you combine such practices to the overall stupidity of today's average citizen, you get a failing market. My personal favorite, which I predicted would end up this way, was the no interest mortgage. Only a fool would sign on for one of those puppies in a dicy market with rising mortgage rates. All of those fools are now at that 3rd+ year where they need to refi, and cannot make their payments now that they've become real. Worse is they have zero, or negative equity to boot. This stuff is cyclical and that fact will never change. What amazes me is all the tardo's who opt to buy in a fragile, and volatile market. Being 32, I've had 6-7 friends get married over the last couple of years, and almost all have bought houses. I told them not to, or to buy within their needs, but virtually all of them didn't listen, and now they are paying the price.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

Real World

Yeah, CEO's, and their bonus', are the root driver in the housing market.

So about that 30-40%....

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

Real World

Stock prices matter very little to a housing market. The biggest factor in housing is mortgage rates, followed by an economies strength. This upturn in housing costs started in the late 90's when people had been bank rolling money from a very prosperous 90's, and the fed dropping mortgage rates. It's lasted to this point because rates continued to fall, people were thus able to refi and draw cash via their equity, and a recession was averted pre, and post 9/11 because of tax cuts and surplus refunds. That the bubble is bursting is directly related to subprime lenders, cyclical history, and moronic purchasers. Also, the bubble right now is not national, it's regional. In '89 the bubble was national, and more severe because the economy went into serious recession.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

BelichickFan

It's not the banks' fault, it's people's fault for either buying a house when they can't afford it or buying too much house. "Predatory lending" ? "I hope they (banks) all pay dearly" ??? Did someone force people to take out these loans ?

Just because too many people get funky adjustable loans because they can't see 5 years in front of them is not the banks' fault. Had they had stricter loan standards the opposite argument would be made that they were shutting out the lower middle class and below.

Whether it's a computer, car or house, buy what you can afford. And if you don't you only have yourself to blame.

STFarmy

I have to agree to an extent. While the banks shouldn't be pushing these horrific loans, people should be smart enough to not buy into them. Unfortunately, we all know that most people aren't smart. So both are kind of at fault.