Zillow.com the real estate industry's barometer of home prices, today reported that 21.8% of all homes in the US are "Underwater." That means that the house is worth less than the mortgage. That amounts to about 20 million homes.
The facts are worse than the news. If 20 Million is 21.8% of all homes, there are approximately 100 million homes in the US. However, 1/3 of them do not have a mortgage. Therefore, 20 million means that actually 1/3 of all homes with mortgages are underwater!
Think of that. What does that mean for the housing market, the banks, the economy?
A sizable number of those homes will be lost to foreclosure. What incentive does a homeowner have to keep up with his payments if an emergency comes up? Will they pay their mortgage or their doctor bill, or their exploding credit card bills, etc.
This means a continued increase in the amount of homes foreclosed on and a continued drop in prices as those foreclosed homes are dumped on the market at fire-sale prices.
Typically, regional bank reserves are about 50% in home mortgages. If 1/3 of them are underwater, what does that do to the value of the bank reserves? For every $1 loss in reserves, the bank will have to cut $10 in lending, adding to the drying up of credit.
How about the big, money center banks sitting there with Trillions in housing derivatives? "Normally" losses of 1-3% in the value of the mortgages underlying the security is projected. What happens to the value of the security when those losses approach 30%? Again, the value of the reserves is dramatically slashed, further choking off credit.
Unfortunately, we are in worse condition than the mainstream media and the government wants you to believe.
If you want to learn more about the reality of our situation and what you can do to protect yourself and your family from economic ruin, read the other posts in this blog.
Bill Young, 646-961-3818
Showing posts with label mortgage delinquencies. Show all posts
Showing posts with label mortgage delinquencies. Show all posts
Friday, May 8, 2009
Wednesday, April 22, 2009
New Housing Numbers!
From Housing Wire:
Residential: -
"All loans 60+ days delinquent increased from 834,831 as of November 30 to 1,229,051 as of January 31, representing an increase of 47% over the period, the FHFA said. "
"However, prime loans 60+ days delinquent increased by 69.6% while non-prime loans increased by a significantly lesser 23%."
"Reasons for default: 34.1% of homeowners cited curtailment of income as the main cause of default, 19.8% reported excessive obligations, 8.1% said unemployment, 6.5% said illness and 3.5% cited marital difficulties, such as the loss of a spouse’s wages. "
C'MON GUYS! Can't you just be honest and admit it is UNEMPLOYMENT that is "THE REASON?"
How about the government's mortgage relief plans to help homeowners?
"In January 8,953 loan modifications were completed compared to 8,688 in December and the prior 3-month average of 7,926, the FHFA reported. This represents a 3 percent increase in loan modifications by Fannie Mae and Freddie Mac from December 2008 to January 2009."
WOW, 8,953 loan modifications out of 1,229,051 delinquent mortgages! Unfortunately, that will probably be the high water mark for loan mods. The government, quiet as it was kept, on April 9th agreed that bank's did not have to report the losses sustained in its residential mortgages!!!
These losses were the primary drivers behind the banks willingness to consider modifications, short sales, etc. That has been removed!
On the commercial side, we had a hush hush collapse of the 2nd Largest owner of shopping malls in the US! I did see the bankruptcy of General Growth Properties mentioned on CNBC (24 hr Infomercials for Wall St!) and a passing mention on MSNBC.
THE 2ND LARGEST OWNER OF SHOPPING MALLS DECLARED BANKRUPTCY and the stock market went up about 122 points!
Is this amazing or what? Do you really think we are getting the real picture of what is going on with the economy?
This is stunning news, but the worst is yet to come! There are 5 other behemoths in this category as well that will probably be gone by the end of the year!
My sources estimate that up to 30% of all commercial loans will go bad in this Depression!
What will that do to banks and especially insurance companies that are big lenders to commercial real estate? What will it do to the value of the CRMBS, the Commercial Real Estate Mortgage Backed Securities held by municipalities, benefit funds, retirement funds?
The one thing you can count on is that the Fake Reserve Bank, the Government, Wall St and the Mainstream Media will keep the bad news hidden from you, no matter what the cost!
Check out my Tuesday radio broadcast where I bring you up to speed on what is really happening in this economy: http://MyMoneyShow.com
Residential: -
"All loans 60+ days delinquent increased from 834,831 as of November 30 to 1,229,051 as of January 31, representing an increase of 47% over the period, the FHFA said. "
"However, prime loans 60+ days delinquent increased by 69.6% while non-prime loans increased by a significantly lesser 23%."
"Reasons for default: 34.1% of homeowners cited curtailment of income as the main cause of default, 19.8% reported excessive obligations, 8.1% said unemployment, 6.5% said illness and 3.5% cited marital difficulties, such as the loss of a spouse’s wages. "
C'MON GUYS! Can't you just be honest and admit it is UNEMPLOYMENT that is "THE REASON?"
How about the government's mortgage relief plans to help homeowners?
"In January 8,953 loan modifications were completed compared to 8,688 in December and the prior 3-month average of 7,926, the FHFA reported. This represents a 3 percent increase in loan modifications by Fannie Mae and Freddie Mac from December 2008 to January 2009."
WOW, 8,953 loan modifications out of 1,229,051 delinquent mortgages! Unfortunately, that will probably be the high water mark for loan mods. The government, quiet as it was kept, on April 9th agreed that bank's did not have to report the losses sustained in its residential mortgages!!!
These losses were the primary drivers behind the banks willingness to consider modifications, short sales, etc. That has been removed!
On the commercial side, we had a hush hush collapse of the 2nd Largest owner of shopping malls in the US! I did see the bankruptcy of General Growth Properties mentioned on CNBC (24 hr Infomercials for Wall St!) and a passing mention on MSNBC.
THE 2ND LARGEST OWNER OF SHOPPING MALLS DECLARED BANKRUPTCY and the stock market went up about 122 points!
Is this amazing or what? Do you really think we are getting the real picture of what is going on with the economy?
This is stunning news, but the worst is yet to come! There are 5 other behemoths in this category as well that will probably be gone by the end of the year!
My sources estimate that up to 30% of all commercial loans will go bad in this Depression!
What will that do to banks and especially insurance companies that are big lenders to commercial real estate? What will it do to the value of the CRMBS, the Commercial Real Estate Mortgage Backed Securities held by municipalities, benefit funds, retirement funds?
The one thing you can count on is that the Fake Reserve Bank, the Government, Wall St and the Mainstream Media will keep the bad news hidden from you, no matter what the cost!
Check out my Tuesday radio broadcast where I bring you up to speed on what is really happening in this economy: http://MyMoneyShow.com
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