Another Wave Of Foreclosures Is Poised To Strike [Iceberg Right Ahead!]

LATimes ^ | July 04th 2009

[Steelfish]

Another wave of foreclosures is poised to strike

Robyn Beck / AFP/Getty Images

John Wayne, left, owner of California Realty in Victorville, is helped by an employee as he hangs a sign advertising for future business after California imposed a statewide 90-day moratorium on housing foreclosures.

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. Don Lee

July 4, 2009.

Reporting from Washington -- Just as the nation's housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.

Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year.

Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration's home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments.

Just how big the foreclosure wave will be is unclear. But loan defaults are up sharply. And with many government and banks' self-imposed foreclosure moratoriums expiring, the biggest lenders indicate that they are likely to move more aggressively to clear up a backlog of troubled mortgages.

[allmost]

Time for congress to screw with the lending criteria again...

[rovenstinez]

Sounds like that big HUGE Earthquake but this is Financial..all along the San Andres Fault...

[richardtavor]

Home Affordable Modification Program, in which their loans are being reworked so monthly payments are targeted at 31% of their gross income, said Seth Wheeler, a senior advisor to Treasury Secretary Timothy F. Geithner.
This is what they are trying to adjust people to? My gosh, that is 2 and a half times higher than what I pay, and I pay too much...we are in big trouble......

[Shannon]

You're right, 31% of their gross is huge. All it's going to do is delay the inevitable.

[upchuck]

31%. Damn!

Back in the good old days the metric was: had a good job for at least two years, payment to be no more than 25% of your take home pay, put down at least 20% (and if you didn't have 20%, delay the purchase while you saved like crazy until you did), mortgage term 30 years.

People today are idiots!

[blam]

"Even as defaults among subprime borrowers have trended lower this year, newly initiated foreclosures involving prime mortgage loans saw a significant increase in the first quarter, jumping 21.5% from the fourth quarter, according to a government report of loan data from national banks and federally regulated thrifts."

Not good news either, the good guys are going down too.

[blam]

"Back in the good old days the metric was: had a good job for at least two years, payment to be no more than 25% of your take home pay, put down at least 20% (and if you didn't have 20%, delay the purchase while you saved like crazy until you did), mortgage term 30 years. "

Yup. Those are the conditions I was always confronted with except maybe 10-15% down payment.

[CodeToad]

“Back in the good old days”

Earlier than that, the banks hadn’t affected the housing industry and inflated the prices by offering “affordable” mortgages, so people saved for 5 years and paid cash or at least saved the $2,500 for half down.