The Mortgage Bankers Association announced numbers on Friday of delinquencies in the last quarter of 2009. No surprise that most journalists and government people are saying that this is "Proof we are coming out of the housing crisis". What they fail to mention is that a large- VERY large percentage of lenders put a moratorium on foreclosures over the holidays in an effort to allow homeowners to enjoy the holidays in their homes for one last year before they had to find other living arrangements due to foreclosure.
The other 'fail to mention' is the fact that there are many homeowners who took the famous pick a pay loans with teaser starter rates of 1-2% interest only that reach their 5 year re-cast period in 2010 and 2011. The majority of these homeowners will find it impossible to afford their new payments where 're-casting' calls for taking their mortage and re-setting the payment to fully amortize payoff in the remaining 25 years... at the new principal balance which now could easily be a balance that is $50,000 or more than the original loan amount. This takes into consideration that the majority of borrowers paid only the 'teaser rate' minimum payment required for the past 5 years which piled on interest not paid to the principal balance every month. Take that higher loan balance on a home financed at 100% and add the fact that most home values in San Diego County have plummeted 30% and more. DISASTER for sure. Payments could easily double and even triple according to the re-cast terms.
Add this to the commercial real estate crash thats moving in full force and the only realilty I come up with is 'This crisis is far from over..' My prediction is more bank failures and a very real possibility that our dear government will want permission to throw more bailout money to the lenders..
Deb Espinoza GRI, ABR, ePro, SFR, CNE
Stage Presence Homes
DebSDRealEstatePro@gmail.com
