As the nation’s jobless numbers approach 10%, the rate of property default is outpacing any strides made by the federal mortgage modification plan, which was meant to help rescue borrowers in the direst financial straits. And, as the nearly 1,000,000 foreclosures recorded in the last quarter inevitably begin to hit the market, real estate prices are bound to fall even further. For more on this, see the following article from Property Wire.
A flood of people losing their jobs in the US has pushed up foreclosure property rates by more than 5% as predictions that the default crisis is not over yet seem to be coming true.
The latest figures from RealtyTrac show that the foreclosure crisis affected nearly 938,000 properties in the July to September quarter, compared with about 890,000 in the prior three months.
If this continues foreclosures are set to hit about 3.5 million this year, up from more than 2.3 million last year.
The organization said that unemployment is the main reason property owners are falling into trouble.
Even with the US economy coming out of recession the rising jobless crisis is not going to disappear overnight.
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Already the unemployment rate is at a 26 year high of 9.8% and it isn’t expected to peak until the middle of next year.
Although mortgage companies sometimes allow unemployed property owners to defer three to six months of payments while they are looking for a job the scale of the crisis means there are few options but to move towards foreclosure.
‘The sheer scale of the problem is also preventing the loan modification programs from having the kind of impact we’d all like,’ said Rick Sharga, RealtyTrac’s senior vice president for marketing.
He added that even although the Obama administration reported a record 500,000 property owners have received help since the program was launched in March, new defaults are still exceeding the number of borrowers getting help.
Analysts have pointed out recently, however, that many property owners falling into default don’t qualify and they have predicted a new wave of foreclosed properties hitting the real estate market next year and that’s likely to further depress property prices.
Indeed, some property owners are in such a massive financial hole that it’s hard to find a way of helping them.
Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.
Arizona, California and Florida continue to dominate the foreclosure ratings. While Nevada had the highest rates in the third quarter, Arizona came in second followed by California, Florida and Idaho, then Utah, Georgia, Michigan, Colorado and Illinois.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.