New Wave of Foreclosures
Once dominated by the sub-prime lending debacle, the new wave of home foreclosures focuses on prime mortgages lent to once financially stable individuals.
Many economists are predicting the unemployment rate to increase from its current 8.9 to double digits. The rise can fuel the fire of banks losses and further pressure the financial system and the economy as a whole.
Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary wave, when borrowers’ introductory interest rates expired and were then reset at higher rates.
Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income at the time vs. those that were operating outside of their means.
Some speculate that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.
Leave a Reply