LPS Applied Analytics recently announced that there are $464 Billion in mortgages currently in Foreclosure and that Americans are now behindon mortgages worth $1.4 Trillion. Several economists believe thatsomething really bad could be coming down in the coming months. Infact, leading economists are warning of a new financial crisis brewingthat could possibly be worse than the crisis we faced in 2008 and thatwe could see a collapse of some BIG U.S. banks.
Chris Whalen, the Managing Director for Institutional Risk Analytics stated recently in a Politico article, "Non-payment by borrowers andmounting foreclosure backlogs are creating the conditions for thecollapse of some of the largest U.S. banks in 2011."
Many say that there are banks too big to fail an that we cannot allow them to. But we know now that T.A.R.P. didn't work. Those 6 or 7"too-big-to-fail" banks control over 1/2 of all deposits and most ofthose were made even larger by T.A.R.P. But there's another issue withthe smaller Savings and Loans that exist in our communities. When thoselittle banks face both residential and commercial mortgages failing, wemay see a wildfire spread of enormous consequences that the Fed won'tbe able to contain.
Several government and large banks stated this week that they were going to freeze foreclosures for the next few months. This is great forhomeowners during the holidays and comes as good news to thosehomeowners wanting to do the honorable thing and try every option theycan to keep from going into foreclosure. However, with loanmodifications being rare and/or unappealing, this is only prolonging theinevitable and making it worse. Case in point, if you make $115,000income a year and you owe $550,000 there's no rework for that scenariounder the President's program that will makes sense. And what happensin the first few months of 2011 AFTER the freeze is lifted and all thosestalled foreclosures start moving forward again? With an average of180,000 to 200,000 foreclosures a month, how are we going to accommodatethe flood of a million or more homes hitting the market? The good newsis that the freeze may help many who are conducting Short Sales ontheir homes and who are feeling the time crunch.
Time will tell, however we should all be looking to the horizon because a huge storm is looming and time is running out!
By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoidthis devastating occurrence. And know that there is someone here you cantrust to help. As a Certified Pre-Foreclosure Specialist, I understandthe ins and outs of Short Sales and Loan Modifications. I am also aWachovia and World Bank trained Pre-Foreclosure expert and well educatedin the Government’s new H.A.F.A. and H.A.M.P. programs for helpinghomeowners facing foreclosure.
CLICK HERE TO AVOID FORECLOSURE
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