"Massive wave" of foreclosures coming

[Pale Blue Dot]

The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it.

CA foreclosure background - in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.

Particularly interesting to see that higher-end middle class properties are starting to come through foreclosure at titanic levels.

I've recently remarked on falling absolute levels of inventory in housing in spite of accelerating price declines as a possible intermediate-term precursor to a bottoming process. information like this is a good reason to defer judgment for the time being. the foreclosure problem is clearly still accelerating along with price declines, interrupted only by temporary legal injunctions.

http://declineandfallofwesterncivilization.blogspot.com/2009/04/foreclosures-in-pipe.html

[PSPS]

1. The "liar's loans" will be going through recast for another couple of years

It won't be until these are washed out of the system through foreclosure that there's any hope of a "bottom" being reached. Let's hope Obama known better than to come up with more harebrained schemes to forestall this necessary process.

[vssmith]

6. Who were the liars--the bankers or their customers?

[elehhhhna]

7. Both. I guy I know (ex- Goldman employee) claimed that their

portfolio of "dangerous no-doc" loans, which he audited a few YEARS AGO, was mostly comprised of loans to wanna-be flippers and landlords...not to people who actually resided in the properties. He said we should rework a loan if it's a primary residence and otherwise let the speculators and banks take a hit.

[Warpy]

2. I'm no longer sure how bad this second punch of bad loans will be

because most of the really fraudulent stuff that was written in the spring and summer of 2006 when people were desperate to get houses off the books and keep the comps up have already gone bust, liars who lied to get loans they couldn't afford not being to afford them after the fact, either.

It's still going to be bad. Now we're looking at people who are being foreclosed because their jobs went south, not because they committed fraud getting a shaky loan.

[GoesTo11]

3. I've been looking for a good investment to replace my 401k

This is great news. No, not really.

[formercia]

4. This might be relevant:

unemployment rate

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000

[autorank]

5. "Alt-A liars loans" as William K Black calls them and remainig subprimes - ugly scenario k*r

"The nonprime home lending market consists of 2.2 million "Alt-A" home loans to those with good credit who chose "innovative" adjustable rate mortgages plus 2.7 million subprime home loans to those with marginal credit who, often times, used funds to purchase a first home. The total 4.9 million nonprime loans were used to purchase homes that house around 12 to 15 million people.



"To understand how the future will look, let's examine what happened in the nonprime market in 2008. The following graph shows the risk in just the nonprime loans. Traditional fixed interest loans are less vulnerable at the moment but when GM and Chrysler implode and as small businesses disappear, traditional loans will show up at risk in droves.



"When a nonprime loan "resets," it adds an average of three to six points to the loan payment for Alt-A's and subprimes respectively. It's quite a shock."



http://www.opednews.com/articles/2/Too-LIttle-Too-Late--The-by-Michael-Collins-090219-101.html