The Bleakest Year in The Foreclosure Crisis Has Only Just Begun

Two reports from separate credit rating agencies are drawing the same conclusion: foreclosures will reach new heights this year, even after setting records in 2010.

It was hoped until recently that mortgage delinquencies and subsequent foreclosure filings had peaked. Until the peak occurs, the stockpile of properties facing imminent default -- the so-called "shadow inventory" -- will continue to glut real estate market supply, depreciating home values.


Standard & Poor's currently estimates that the principal balance of distressed homes amounts to about $450 billion. S&P expects that it will take 49 months to clear the supply of distressed homes on the market in the U.S. -- an 11 percent increase over the previous quarter and a considerable 40 percent increase from 4Q 2009.

Associated Press reports that "the bleakest year in the foreclosure crisis has only just begun." Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006, according to AP.  About 5 million borrowers are at least two months behind on their mortgages and industry experts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.


"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.

The blistering pace of foreclosures this year will top 2010, when a record 1 million homes were lost, RealtyTrac said Thursday. One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida. California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top ten states with the highest foreclosure rates.

This is markedly different from the situation one year ago, when tax incentives started to have what turned out to be a short-term effect on the housing market.

Foreclosures have affected not only local homeowners, but local economic development projects, as well. The Cancer Treatment Centers of America is in the process of clearing the final hurdles to ramp up construction on the new regional cancer hospital in Newnan.


Construction on the new 50-bed, 200,000-square-foot hospital was originally supposed to begin last month, but the CTCA filed for a one-year extension due to problems with gaining access to the land title. The state Department of Community Health approved that request, setting a new date of Dec. 17, 2011, for construction to commence on the $179,767,423 facility.

Economic and housing experts tend to agree that the slide in the real estate market will likely extend through at least the end of 2011, and probably even longer. Nationally, for almost two years now, foreclosures have remained above 300,000 per month, an unprecedented event in American history.

Visit www.shortsaleprologic.com today to find the properties going through foreclosure in your area and what steps to take next.
From Times-Herald.com