According to the numbers reported in USA Today on May 15, the mortgage crisis is worsening. Foreclosure filings were up 65% in April from a year ago, leading some analysts to warn that the disaster may not end before 2010. According to RealtyTrac, 243,353 homes were facing foreclosure nationwide last month, which amounts to roughly 2 percent of all homes. These latest numbers are the highest since the company began issuing foreclosure reports in January 2005.
Foreclosure filings rose for all but eight states. Those hardest hit by foreclosures include Arizona, California, Florida, and Nevada, states where subprime lending and escalating home prices were rampant.
“For the foreclosures to stop, inventories have to stop rising, and home sales have to rise,” says Mark Zandi, chief economist of Moody’s Economy.com. Zandi, who believes that foreclosures will continue rising well into 2009 and possibly 2010, also said, “We need prices to come down some more.”
Joel Naroff of Naroff Economic Advisors confirms that foreclosures could persist at a high rate into 2010. “Prices are dropping and will continue to fall throughout the year,” Naroff advised. “People want to buy, but they can’t get financing.”
Signs that the mortgage crisis is accelerating include sinking home values, rising foreclosures, swelling supplies of homes for sale, and tighter lending rules, which shut out buyers wanting to purchase homes or refinance their mortgages.
Rick Sharga of RealtyTrac believes that, without government intervention, the situation “will almost certainly get worse.” Sharga says to “expect a spike [in foreclosure filings] the third and fourth quarter” this year.
Congress is working on a bill that would let borrowers facing foreclosure refinance with federally insured mortgages. The bill’s prospects, however, remain uncertain at this time.