Just received notice from Amhesrt Security Group that they estimate another 7 Milion homes are in the bank's unsold inventory of foreclosed homes!
We are also at the early stages of a catastrophic wave of new foreclosures as the Option Arms reset and Jumbo loans default at a record pace.
Option Arms were loans made to good credit buyers that employed a microscopic "Teaser" interest rate, is some cases as low as 1% for the first 3-5 years of the loan. These resets will take place between the end of this year and 2011Estimates are that as much as 70% of these loans will default, given the employment picture which is still worsening.
Jumbo loans were large loans given to "Executive" home buyers. So many of these loans have defaulted that Thornburg Mortgage, the larges player in this market just went under. Their avearage Jumbo Loan borrower had a FICO score of 740 and an income of over $200,000!
We predictt that because of the factors mentioned above, the number of "Underwater" mortgages, where the value of the house is less than the mortgage balance will exceed 50% by mid 2010, if not sooner.
This will initiate the real bottoming of the market, the capitulation of millions of sellers who were holding their properties off the market waiting for the market to improve.
As they dump their properties into the ballooning cascade of the bank owned REO's, prices will plummet another 50% from where they are now, bringing the median priced home below $100,000 in many areas.
As far as the governments efforts to shore up housing and prevent this scenario? Puleeze!
Bill Young 646-961-3818
PS If you cannot pay your mortgage, we can show you how to stay in your home for 1-3 years without making any more payments! Call for info
We al Estate Owned
Thursday, October 8, 2009
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