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Foreclosures Bank Owned Risks Decline in the U.S.

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By : John Cutts    99 or more times read
The risk posed by foreclosures, including government-related and foreclosures bank owned, has diminished in the U.S. for the 2010 third quarter. However, housing market experts stated that the decline is not much as to merit a conclusion that the housing industry crisis is at its end.

According to the Mortgage Bankers Association (MBA), the number of distressed houses dropped in the July to September 2010 period, along with the number of delinquent borrowers. For the quarter, around 9.1% of U.S. borrowers have failed to pay their mortgage for at least a month. The figure is lower than the 9.9% recorded in the 2010 second quarter and the over 10% delinquency rate recorded in the first three months of the current year.

The number of foreclosed new homes is expected to be lower for the remaining months of 2010 as houses undergoing the process of foreclosure also declined from 4.6% to 4.4% in the third quarter. The number of borrowers who are seriously delinquent, or those who are at least three months late in their mortgage payments, also decreased from 4.8% to 4.3%.

According to MBA, the decrease in foreclosures bank owned totals and in the number of delinquent borrowers can be partly attributed to the improving job market. Despite the decline though, analysts from MBA believe that levels for both foreclosure and delinquency are still much higher than normal market levels. Most housing industry analysts expect these levels to remain high while the country's unemployment rate also remains high and values of property remain low.

Housing experts also predict that it will take at least three years for the country to work through the supplies of delinquent mortgage loans and foreclosure inventories, including bank owned properties, homes under lists of foreclosure VA and other types of foreclosed real estate. They also stated that the problem has now encroached on households with higher income and good credit ratings.

When the crisis started, analysts stated that foreclosures bank owned and other distressed property problems were limited to those who had risky mortgages with interest rates that are variable and to people who took out loans they cannot afford. Now, even those who have supposedly safe fixed rate loans are being affected by the foreclosure crisis, primarily because of the nation's high unemployment rate and the economic downturn.

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