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Foreclosures continue to climb
A foreclosure sign
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Kai Ryssdal: Not that you necessarily needed or wanted more evidence that the housing problem just won't go away but it won't. Not even a little bit. Home foreclosures, already at an all-time high, keep on climbing. The real estate data firm RealtyTrac said today that banks will likely repossess more than a million homes by year's end -- that's up 38 percent from a year ago.
We asked Marketplace's Mitchell Hartman to try to figure out when it might end.
Mitchell Hartman: Keep in mind, foreclosures continue to increase, even though all those "bad-toxic-really-dumb" mortgages people took out during the housing boom are mostly behind us.
The problem now, says Sarah Wachter at the Wharton School, is all the people who can't pay their mortgages because they're unemployed, or don't want to pay because they owe more than their house is worth.
Sarah Wachter: We have a long way to go in many of these markets before home values rise to equal the level of the mortgages these households are paying on, or in this case, actually, not paying on.
Wachter says low home values will lead to even more foreclosures. The foreclosed homes get priced cheap by the banks, just to move them off their books. It's a vicious cycle, says housing analyst Desmond Lachman at the American Enterprise Institute.
Desmond Lachman: We could expect housing prices to decline by perhaps another 5 to 10 percent over the next year, before eventually stabilizing.
There is one bit of encouraging news, though. Banks are actually sending out fewer foreclosure notices. This is the first step when a homeowner gets behind on their mortgage, long before the house is actually seized. I asked Wharton's Susan Wachter what's going on?
Wachter: Lenders are increasingly looking to other options -- loan modification, short sales, as lenders have more experience with them. And indeed, as homeowners are coming to terms with the fact that they really have few choices.
And Wachter says, between all the foreclosures and short sales now on the market, plus ridiculously low interest rates, it really is cheap to buy a house again.
I'm Mitchell Hartman for Marketplace.
Why does marketplace always cry a river when housing prices go down, and throw a party when housing prices go up? I would love it if housing prices dropped. Lets imagine that housing prices dropped by %50 today. How many more people would be able to afford their own homes? Think of the money that homeowners would then have to spend on consumer goods.
As I am a Realtor and business has been, uh, slow, for two years, and my husband on permanent disability, we applied diligently for a loan mod with Bank of America. For 9 mos., they strung us along, lost our paperwork, 3 times, rang the phone day and night, and finally said "no, no mod for you. But, we'll give you a forebearance of 3 mos. you don't have to make any payments. Get caught up. So we did not pay, and the threatening calls began, the credit report went down, (we never missed a paymen before) and we got a Notice of Default while they were supposedly looking into it. I took money from my 401K, we already spent all of our savings and my husband's 401K, and paid them off. I am convinced that B of A and the other banks, are not the bumbling fools we've all come to think they are, but out and out villains intent on stealing as many homes as they can trick people out of. All they are missing is the mustache to twirl. Once I can transfer my loan, I will never set foot in a B of A again. I'm only one of hard working people, who did nothing wrong, did not refi, take out the equity, all the things these homeowners are accused of, I just lost my livelihood. And the banks are taking advantage of American citizens, and being paid by us, via our taxes, through government programs, to do so.
