Foreclosures Expected to Double in 2010

GSIG LLC

Foreclosure experts at USHUD.com predict that there will be a doubling of foreclosure rates this upcoming year. Driven primarily by financial industry practices and changing government policies, they see a convergence of factors aggravating an already devastated housing market in 2010,

USHUD.com CEO Michael Urbanski says the first and most obvious factor is the unemployment rate, which continues to languish in the 10% range nation-wide, and often much higher regionally. He explained that similar unemployment rates have historically affected 20% to 30% of homeowners’ capability to make their scheduled mortgage payments. The second factor is the constriction of lending due to tightening mortgage requirements.

Urbanski states:
“The mortgage pendulum is now swinging too far to the opposite spectrum of what we saw at the height of the real estate market. Lending institutions are creating hurdles so high that it will put qualified home-buyers back six to 12 months in the buying cycle.”

Urbanski also notes that struggling homeowners who seek loan modifications are increasingly experiencing problems qualifying for programs that could fend off foreclosure.

“The current qualifications are so absurd they require the homeowner to prove that they do not need a modification in order to get one,” said Urbanski, calling the results of the administration’s Making Home Affordable program “underwhelming.”

Urbanski, referring to a National Association of Realtors (NAR) study that finds the average U.S. home depreciated 12% from 2008 to 2009, states selling will become an impossible proposition for a growing number of upside-down homeowners.

“Watch the horizon. Left unchecked, the perfect storm may be only one more bad policy away.”

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