TGIF everyone! So how bad is the housing market imploding? Well take a look at this from Bloomberg:
" Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages.
The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.
``We don't have a sense of the magnitude of what's really going on because the whole process is being delayed,'' Zandi said in an interview. ``Looking at the data, we see the problems, but they are probably measurably greater than we think.''
Lenders took an average of 61 days to foreclose on a property last year, up from 37 days in the year earlier, according to RealtyTrac Inc., a foreclosure database in Irvine, California. Sales of foreclosed homes rose 4.4 percent last year at the same time the supply of such homes more than doubled, according to LoanPerformance First American CoreLogic Inc., a real estate data company based in San Francisco."
Oh my God this is crazy!!! Its obvious this meltdown is imploding so fast that the banks do not have the manpower to keep up with the foreclosures. What Mr. Zandi said is dead right. The current data is not accurate and here is the scary part: The foreclosure rates without these homes are already the highest in history!!! Imagine what the inventories would be if they included these squatters.
This time bomb may burst faster then I thought. some more from Bloomberg:
``Excess inventories pose the biggest risk to the market,'' Michelle Meyer and Ethan Harris, New York-based economists at Lehman Brothers Holdings Inc., wrote in a report last month. ``As long as inventories are high, home prices will fall.''
With home sales dropping and national inventories rising, the lenders have another reason to delay foreclosures, said Howard Fishman, a real estate investor based in Minneapolis.
``What are the banks going to do?'' Fishman said. ``They don't want the house. They have a mortgage for $1 million and the house is worth $750,000.''
Inventories kill prices. This is why you should not be buying foreclosures in Cali and Florida right now. Some areas have years of inventory and prices will continue to fall.
Of course the idiot housing speculator Mr. Fishman has it all wrong. What are the banks going to do Mr. Fishman? There are going to grab your house and dump it as soon as they can catch up to you. Its a $750,000 asset that you are not paying the mortgage on!!! I am sure they would prefer to have $750,000 in cash versus having a million dollar loan they are not getting paid on. What a moron.
Now if homeowners start doing the following then all hell could break loose:
"Borrowers in California who fight foreclosure can stretch the process to 18 months, said Cameron Pannabecker, chapter president of the California Association of Mortgage Brokers and president of Cal-Pro Mortgage Inc. in Stockton.
That doesn't take into account the woman he knows who hasn't made a mortgage payment in eight months and hasn't heard from her lender, Pannabecker said.
``Now she's afraid to mail in a payment for fear it'll come to somebody's attention,'' he said."
This is the banks worst nightmare. What if people who can afford their mortgage just stop paying? Maybe homeowners with prime loans will get tired of watching their neighbors live for free and decide they want their handout too.
Bottom line is this is nowhere near the time to buy a house!!! Let all of this play out. Its already gotten ugly. My guess is the housing crisis going to rapidly get a lot worse and prices are going to begin to free fall. Get some popcorn and watch the implosion. Its right around the corner.