Foreclosure Floods Predicted As Credit Rivers Turn Dry

September 11th, 2007 | Tags: Foreclosure

The country is reeling under the foreclosure tsunami. The eye of the storm was the sub-prime mortgage market. During the past few years lenders were lured into borrowing to have a house of their own. The initial terms were tempting – with no down payments and interest-only monthly commitments. But after the honeymoon period the monthly rates shot up – rose well beyond the means of the borrowers. The lenders then moved in.

Property rates have gone done and there is no equity left to clear dues. Worse days are being forecast. The economy of the entire country is caught in its vice like grip. Those who are analyzing the housing scene predict that before the end of 2009 foreclosures will reach a peak of 3 million and above. The writing is on the wall pointing to the correctness of this forecast. New York Stock Exchange Dow Jones has dropped by nearly 2,000 points during the last month.

Gigantic recession is in the offing if the Congress and Federal Reserve Board of Governors fail to act swiftly, timely and effectively. Help must be given to the besieged foreclosed victims.

July saw an all time record with a 0.65%. But that is not the end of the story. The predictions are made after detailing facts. More than 2 million ARM mortgages are ready to reset to higher amounts in the following two years. Of these properties many are held by investors who have been unable to sell or rent off their previous units till date because of lack of demand.

The present crisis is worse than the USA Savings and Loan Fraud Scandal. The number of homes, condos and town houses sitting on the shop shelves begging for buyers has reached unimaginable numbers. Although during the past two months the number of pre-sold homes went down, newer home numbers show a rise. The country’s giant developers have cut down prices to tempt buyers.

But where is the money with which to make the best of such bargain offers? Loans are not easy to come by. The mortgage industry has become sick. Already about 80 sub-prime mortgage concerns have slipped into bankruptcy or vanished out of sight. Many have downed shutters or reduced staff.

There are 14 states with local housing markets dotted all around the southeast and west. Their markets are beginning to climb.

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