Managing a Potential Flood of Foreclosures - CNBC
You can talk all you want of renewed interest
in housing, slowly increasing sales and supposed stabilization in
prices, but the elephant in the room is slowly growing, and banks,
Fannie, Freddie and the government know it. I'm talking about
foreclosures.
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Getty Images Home in foreclosure.
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Economist
Mark Zandi, often quoted by lawmakers on both sides of the aisle, told
the Senate Budget Committee this morning that while he's "optimistic"
with regard to the economy's prospects, "At the top of my list of
concerns, at least in the near term (6 to 12 months), is the ongoing
problem in the housing market and the foreclosure crisis."
REO
inventory is rising, he proved through some slides. Four million
seriously delinquent loans, out of 50 million first mortgage loans, "so
that's a lot." And while he noted that the problems appear to have
peaked, there are still over 600,000 properties in REO, which will only
put more pressure on prices when they come to market.
Zandi
called modification efforts "inadequate," despite the 1.5 to 2 million
modifications a year. "In the context of all the problems that we've
got, it's still quite small," he noted. Zandi's biggest concern is that
14 million homeowners, according to his calculations, are underwater
(owe more on their mortgages than their homes are worth), and 4 million
of those are underwater by more than 50 percent. "That's deeply
underwater," he elaborated.
This testimony just happened to coincide with a few blurbs of information I've noted over the past few days.
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