Smart Borrower Blog

Experts Warn OF Another Wave Of Foreclosures

Apr 20th, 2009 @ 3:32 PM by Alden Smith

With rising unemployment numbers, housing prices falling and inventory going up, industry experts are predicting that a second wave of the mortgage crisis is due to happen.   They predicted this new wave will be even more severe than the subprime mortgage crisis.

Everyone is aware that the housing market is far from normal.   Stability will not happen in the market soon, because the great amount of inventory is causing home prices to drop and the job market is unstable.   I recently wrote on option ARM’s, and the problems this type of mortgaging brought to the market.   With current market conditions, the option ARM interest rates are sure to spike.   At present, many people are living paycheck to paycheck.   Adding in a couple hundred dollars more because an option ARM has reset can serve to drive the homeowner to a point where they can no longer make the monthly mortgage payment.   If this happens, a new flood of mortgage foreclosures will occur.

The mortgage crisis is far from being over.   Everywhere we turn we see something new happening that causes further instability.   Many mortgages are underwater, and homeowners are struggling to keep a roof over their head.   Unemployment is at an all-time high.   The NBC Nightly News tells us that four out of five people losing jobs are men that work in construction and home building business.

The government is struggling with ways to deal with the situation.   Past history shows that much of this help has been useless to many home owners in dire straits.   How this will sort itself out is anybody’s guess.   It is obvious, though, that something has to change to bring stability to the economy.