Saturday, August 21, 2010

Record Foreclosures, Record Bankruptices, Fannie and Freddie Hurting

Foreclosures are continuing to set new records each coming month. Home foreclosures set another record for the second consecutive month in May. According to RealtyTrac, a total of 1.65 million homeowners received foreclosure filings during the first half of 2010. This works out to be over 9,060 homeowners are receiving a foreclosure notice every day. This is a staggering number.

All of these foreclosures will be adding to the massive inventory of unsold homes, called the shadow inventory that I talk about in the TOWER REPORT. As of March, banks had a shadow inventory of approximately 1.1 million foreclosed homes. This was up 20% from a year ago. While the demand for loans to purchase homes sinking to a 13 year low, it is going to be hard for banks to get rid of this massive shadow inventory of homes. In these economic times very few people can pay cash for their homes, so without more loans there is not going to be an increase in housing sales. Needless to say, this is going to have a considerable depressing effect on not only the economy but housing prices in the months and years to come.

Many banks are now increasing their efforts to repossess homes that are in default. Banks repossessed 269,962 homes during the second quarter of 2010. This set a new all-time record. The days when defaulted homeowners could stay in their homes rent-free are fast coming to an end.

The number of Americans falling behind on their mortgage payments continues to increase. According to The Mortgage Bankers Association, more than 10% of all homeowners with a mortgage missed at least one mortgage payment during the first quarter of 2010. That set a new all-time record and represented an increase from 9.1% during the same time period in 2009.

The number of the long-term unemployed in America continues to set records. Because of the lack of jobs and the growing unemployment crisis, mortgage delinquencies are also growing at a very alarming pace. As of March 31st, serious mortgages delinquencies at Fannie Mae and Freddie Mac had increased over 50% from a year earlier. Over 6% of mortgages held by Fannie and Freddie are either seriously delinquent or in foreclosure. To top this all off, Fannie Mae and Freddie Mac are facing over $5 trillion dollars in liabilities that the government is going to have to deal with before the mortgage and housing industries completely collapse. Both Fannie and Freddie have become gigantic bottomless money pits.

Bankruptcies are on the rise and setting new records every month. Over 1.4 million Americans filed for bankruptcy in 2009. This was a 32% increase over 2008. And 2010 is working out to be another record setting year.

So what does a distressed homeowner do? Where can he turn? Many answers can be found in the TOWER REPORT. One strategy in the report reveals how a homeowner can use DIY bankruptcy to stay in their home for many months, maybe even years.

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