Twin Cities Facing Second Foreclosure Wave
July 2nd, 2009
The Twin Cities are facing a second foreclosure wave at a time when it has still not recovered from the first attack. Thousands had been drowned by the first wave with property values falling to all time low levels.
There was a lull in foreclosures during the winter of 2008 that continued up to the spring of 2009 but this was only temporary. Experts are apprehensive that lenders will resume foreclosure operations at hectic speed this year as more house owners are losing jobs. What remains a big question mark is how many lenders will work with the struggling borrowers to enable modification of loans so as people continue to stay in the houses that are their homes.
In the Twin Cities the median price of property fell by 37% from June 2006 to February 2009. The main reason behind this catastrophe is the tsunami of foreclosures that hit the nation. A second attack will further delay recovery of the real estate market.
Paul Weingarden of Usset representing Weingarden & Leibo said, “The people who said the foreclosure boom was over — they were whistling in the dark. It’s not over. It’s just a lull.”
The first rush of foreclosures came from the sub-prime mortgages. The borrowers were basically weak and took larger loans than they could afford. These defaults are still continuing and have not died down. At this point the next flood is poised to break. Here the borrowers come from a better economic class and they are more evenly spread out in metro regions. This is giving rise of hope to many that they will be able to tide over the second wave.
However if the economy picks up and loan modification programmes get going many will be able to ward off foreclosures and continue to live in their homes said Professor Prentiss Cox of University of Minnesota. He specializes in the housing market. This second wave is different in quality from the first set. The sub-prime loans were weak in structure making default inevitable for many. Cox said, “The key to the next wave is that it depends on economic conditions including jobs, income and interest rates. And it is probably manageable with good public policy, which was not as true for the first wave.”
There is a slim chance that the declining trend of foreclosure auctions will continue if the federal government forcefully implements the plans it has chalked out to encourage the lenders to step forward with modifications.
- Fewer Foreclosures Among Low-cost Brooklyn Homes
- Bank of America is a Lagging Behind in Loan Modifications to Prevent Foreclosures
- The Aftermath of the Housing Boom is Followed by Foreclosure Doom in Homestead
- Lenders Being Legally Challenged for Activating Predatory Lending
- Foreclosures Have Made Life for CEO’s Expensive and Fraught With Fear
- With Foreclosures and Unemployment Continuing it is Doubtful if Recession is Over
Related Posts
Posted in
Foreclosure |
No Comments »
Comments
Leave a Reply
Search
