Mostly Foreclosures Articles

Over the next five years, one out of every 8 American homeowners will end up in foreclosure, and estimate of approximately 6.5 million families – is the grim prediction of investment bank Credit Suisse.

Released in a report last week, “Foreclosure Trends: A sobering reality.” Credit Suisse predicts the price of homes will continue to fall throughout 2008 and 2009, causing a huge wave of foreclosures.

Excerpts from this transcript include:

“… We estimate a total of 6.5 million loans will fall into foreclosure over the next five years, with the peak in 2008,” the report says. “That estimate includes about 1.2 million loans currently already in foreclosure … The coming flood of new foreclosures could put 8.4% of total homeowners, or 12.7% of homeowners with mortgages, out of their homes.”

Other key points in the report:

• The report predicts housing prices will fall by 10% in 2008 and 5% in 2009, and then grow by 3% in future years.
• The report concludes falling prices - and resulting negative home equity - is “a primary driver of default and that the walkaway effect is alive and well.” In other words, some people who have been paying their mortgages on time, and are capable of continuing to pay, will instead stop paying and walk away once they realize their home is no longer worth what they owe on it.
• Likening the foreclosure crisis to a baseball game, the report says, “We are at best in the third inning … global real estate investors are in the early stages of meltdown.”
• By 2009, the report predicts, 63% of sub-prime borrowers will be “underwater” on their mortgages — owing more than their homes are worth.

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This entry was posted on Tuesday, May 6th, 2008 at 11:20 am and is filed under Foreclosure Homes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.