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Here It Comes Again!

Housing Bust Comes Roaring Back, Worse Than Ever

By MIKE WHITNEY

April 20, 2009

 Due to the lifting of the foreclosure moratorium at the end of March, the

downward slide in housing is gaining speed. The moratorium was initiated in

January to give Obama's anti-foreclosure program -- a combination of

mortgage modifications and refinancing -- a chance to succeed. The goal of

the plan was to keep up to 9 million struggling homeowners in their homes.

But it's clear now that the program will fall well-short of its objective.

(Legislation for cram-downs, that is, allowing judges to reduce the

face-value of the mortgage, is still bogged-down in Congress. Most

economists believe that cramdowns are the only way to keep people from

abandoning their homes when they are underwater on their loans.)

 

In March, housing prices fell faster than anytime in the last two years.

Trend-lines are now steeper than ever before, nearly perpendicular. Housing

prices are not falling, they're crashing and crashing hard. Now that the

foreclosure moratorium has ended, Notices of Default (NOD) have spiked to

an all-time high. These Notices will turn into foreclosures in 4 to 5

months time creating another cascade of foreclosures. Market analysts

predict there will be 5 million more foreclosures between now and 2011.

Soaring unemployment and rising foreclosures ensure that hundreds of banks

and financial institutions will be forced into bankruptcy. 40 percent of

delinquent homeowners have already vacated their homes. There's nothing

Obama can do to make them stay.  Worse still, only 30 per cent of

foreclosures have been relisted for sale suggesting major hanky-panky at

the banks. Where have the houses gone? Have they simply vanished?

 

Here's a excerpt from the SF Gate explaining the mystery:

 

   "Lenders nationwide are sitting on hundreds of thousands of foreclosed

homes that they have not resold or listed for sale, according to numerous

data sources. And foreclosures, which banks unload at fire-sale prices, are

a major factor driving home values down.

 

   "We believe there are in the neighborhood of 600,000 properties

nationwide that banks have repossessed but not put on the market," said

Rick Sharga, vice president of RealtyTrac, which compiles nationwide

statistics on foreclosures. "California probably represents 80,000 of those

homes. It could be disastrous if the banks suddenly flooded the market with

those distressed properties. You'd have further depreciation and carnage."

 

   In a recent study, RealtyTrac compared its database of bank-repossessed

homes to MLS listings of for-sale homes in four states, including

California. It found a significant disparity - only 30 percent of the

foreclosures were listed for sale in the Multiple Listing Service. The

remainder is known in the industry as "shadow inventory." ("Banks aren't

Selling Many Foreclosed Homes" SF Gate)

Lees verder: http://www.counterpunch.org/whitney04202009.html