In 2006, the housing boom in the US began to cool down and increasing foreclosure news is constantly heard from media networks.  Many of today’s homeowner’s (maybe as much as 10% of them) simply cannot keep up with their payments.

In cities where subprime mortgages are prevalent, foreclosure of homes also became widespread.  MS Foreclosure for example. Unfortunately this has led to a decrease in home values as well which just adds fuel to the fire.  Additionally, state and most local governments were forced to cut back on their spending because the drop in the value of these properties sharply decreased their tax bases.

There were 3 different foreclosure signs that were observed by people involved in the market.  First was the bailing out of property owners due to the plummeting prices of real estate.  The second sign was all of the sub-prime loans and adjustable rate mortgages beginning to implode.  Lastly, the third sign has been the fact that even prime rate loan holders are losing their homes now due to job loss and the economic crisis.  In fact, many of these people even have above average or good credit ratings (not for long though).  It is expected that unemployment would contribute to almost 60 percent of mortgage defaults.  Unfortunately, this means that even more foreclosure news will be heard through the rest of this year.

According to an analysis made by New York Times in February 2009 (data provided by First American Core Logic), the number of prime mortgages that have delinquent payments exceeded 1.5 million with loans totaling to 4 billion.  In that same month, the delinquencies on the even worse off subprime mortgages were as high as 1.65 million.  Shockingly over 7 billion in bad loans were on the books for February – up over 60 percent from the same time period a year ago.  All of these foreclosures have also dramatically impacted Wall Street and mortgage bonds.  Not to mention the hundreds of billions of dollars that the banking industry has lost. (Note: Search on ‘forecloser‘ as well because it is a very common miss-spelling of foreclosure and is prevalent in the foreclosure news posts.)

The Obama administration announced in February that they will be spending billion to save as much as four million homeowners from foreclosures through mortgage incentives and reduced payments.  The effects of this plan are expected to be felt in the next coming months.  Until then, we should brace ourselves for more foreclosure news that is looming in the neighborhood.

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