Recent Foreclosure Statistics Predict More Bad News to Come

Reviewing some of the latest statistics put out by the largest foreclosure trackers and banks, a quite disturbing overall picture of the real estate market begins to form. There is no doubt that the buying binge of the past seven years is causing serious consequences, which not even the manipulations of the Federal Reserve are able to overcome. It is amazing that, with the numbers listed below, many of the large banks are solvent enough to enjoy any of the benefits of the liquidity injections of central banks.

In 2007, more than 1% of all homes were in some stage of foreclosure. In 2006, only 0.58% faced foreclosure. This is an enormous increase in the foreclosure rate, and areas hit hardest by the crisis must seem to be turning into ghost towns. If not, at least the values of many properties have completely disappeared, if the residents have not yet moved out. Even worse than the nationwide number, Florida had more than 2% of households entering some stage of the foreclosure process in 2007, with 165,291 total properties entering foreclosure.

Some of the states with the highest foreclosure rates in the nation include California, Florida, Michigan, Colorado, Ohio, Georgia, Arizona, Illinois, and Indiana. This reflects much of our experience working with homeowners in danger of losing their homes, with nearly 25% of the visitors to this site coming from California and Florida, with the other states listed here contributing a significant portion of the total traffic. Ohio is also a notable state, in that one in every 56 households in Ohio entered some stage of foreclosure in 2007, an unbelievable rate.

Since late 2006, over 220 mortgage lenders have gone out of business, filed bankruptcy, or significantly reduced their lending policies due to fallout from the subprime mortgage crisis. Every day, new lenders are also shutting down lending divisions or significantly scaling back their exposure to the mortgage mess. A number of the largest banks in the country are doing whatever they can to minimize the risk, while other large banks are simply trying to keep afloat, after experiencing huge losses in the past year.

In December of 2007, foreclosure filings had jumped 97% from one year ago, indicating that the troubles for many of these banks may be just beginning. Not to mention the fact that many more homeowners are losing their homes now than even a year ago when there were serious worries about the foreclosure rates, homeowners are still experiencing their own personal financial collapse at an astonishing rate.

Clearly, unfortunately, this trend of homeowners in serious financial trouble to the point of losing their homes to foreclosure will continue unabated this year. An $800 check in six months courtesy of government borrowing from China will do little to affect the weakening economy due to the weakening of the average person’s ability to buy products or services. The housing market boom was a result of the inflation pumped into the economy by the Federal Reserve in an attempt to avoid a recession in 2000-2001 after the tech bubble burst and the aftermath of the 9/11 terrorist attacks. But postponing a recession and transferring the bubble to the average homeowner has only made the situation much, much worse. How much worse will remain to be seen.

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