It looks like the mainstream media is catching onto something I've been saying for months. Foreclosures will not be slowing anytime soon. The current batch are primarily the result of the bubble popping, the credit crisis (the end of fantasy financing) and mortgage resets. Job losses account for a small portion of the current crop of foreclosures. But the mounting job losses will inevitably start taking a toll on the ability of some homeowners to keep making the monthly payments. The job losses are accelerating at an alarming rate. Currently they are feeding upon themselves. Job losses in one sector are causing job losses in others. If you add this new symptom to the already long list of ailments it makes a recovery or even a leveling out a remote possibility. If this was a horse we were talking about a bullet would be the cure.
From Bloomberg
U.S. foreclosure filings climbed 28 percent in November from a year earlier and a brewing “storm” of new defaults and job losses may force 1 million homeowners from their properties next year, RealtyTrac Inc. said.
A total of 259,085 properties got a default notice, were warned of a pending auction or were foreclosed on last month, the seller of default data said in a report today. That’s the fewest since June. Filings fell 7 percent from October as state laws and lender programs designed to delay the foreclosure process allowed delinquent borrowers to stay in their homes.
“We’re going to see a pretty significant storm next year,” Rick Sharga, executive vice president of marketing for Irvine, California-based RealtyTrac, said in an interview. “There are two or three clouds that suggest a pretty heavy downpour.”
Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as “real estate owned” or REO properties, will increase to 1 million from as many as 880,000 this year, he said.
Initial jobless claims increased to 573,000 in the week ended Dec. 6, the highest level since November 1982, while the number of workers staying on benefit rolls reached 4.429 million, also the most since 1982, the Labor Department said today. U.S. companies slashed payrolls by 533,000 last month, the fastest pace in 34 years, for a total of 1.9 million job cuts so far this year.
“The labor market is facing its worst crisis since 1982, and it is certainly not over yet,” said Harm Bandholz, a U.S. economist at UniCredit Markets and Investment Banking in New York.
Home prices have fallen by about a fifth from the mid-2006 peak, according to the S&P/Case-Shiller home price index.
‘Devastating Consequences’
“The decline in prices and its devastating consequences” will continue next year with no indication of when they will stabilize, Hall said. Programs that modify the terms of loans, including efforts by Fannie Mae, Freddie Mac, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. can’t help thousands of borrowers, he said.
Something like 70 percent of subprime foreclosures are beyond the reach of modification programs because the owners are investors, because the owner is in default for the second time on the property, or because the owner has disappeared,” Hall said.
California had the most filings with 60,491, up 51 percent from a year earlier, and a rate of one filing for every 218 households, more than twice the national average. California had six metro areas in the top 10, led by Merced in third place with a rate of one in 76 households in a stage of foreclosure. Modesto, Stockton and Riverside-San Bernardino ranked fourth through sixth, Bakersfield was ninth and Vallejo- Fairfield was 10th, according to RealtyTrac.