The figures are in and the verdict does not bode well for the economy, particularly the real estate market.
Fourth quarter 2008 data showed that more and more Americans lost their jobs, fell behind their mortgages, bank foreclosure increased and cheap houses for sale continued to multiply by the day as real estate prices keep going downhill.
According to Mortgage Bankers Association, seasonally adjusted numbers of mortgage delinquencies increased by 7.88 percent for the fourth quarter of 2008, the highest recorded figures since 1972.
The number of foreclosures due to mortgage delinquencies rose to the all-time high of 3.30 percent, leading to an unprecedented number of cheap houses for sale in the country.
Data from First American CoreLogic showed that unemployment increased by 6.9 percent for the last quarter of previous year, the highest recorded since 1993. The slumped in the labor market affected many sectors, particularly the real estate which lost an estimated $2.4 trillion the previous year due to the rapid pace of foreclosures and uncontrollable spread of cheap houses for sale.
This vicious cycle is expected to continue as recession enters its second year. Mortgage Bankers economist Jay Brinkmann said that unemployment is the root cause of mortgage delinquencies, unrestrained foreclosures and increasing number of cheap houses for sale which dragged real estate values into an abysmal level.
He noted that if the problem is loan structure, solutions can be worked out. However, Brinkmann added, if unemployment is the main issue, the only way to avoid a foreclosure is to find a job.
According to Mortgage Bankers, loans in foreclosures and one mortgage past due have a combined percentage of 11.18 while percentage of loans delinquent for 60 days, 90 days and more have surpassed records set in the last quarter of 2008.
Furthermore, home prices dropped by 12 percent last quarter of 2008 from a year ago. National Association of Realtors noted that almost 50 percent of cheap houses for sale were foreclosed homes.
CoreLogic said that over 8.3 million Americans owed mortgages that surpassed the fair market value of their distressed properties as the current economic recession clipped the housing market values by almost $2.4 trillion last year.
And if home prices keep tumbling at its current pace, 2.2 million more borrowers are expected to get into the bandwagon of mortgage delinquencies and defaults, and eventually, foreclosure.
Author Resource:-
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Learn how to invest in foreclosures at ForeclosureHomesInvesting.com.
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