Another Round of Foreclosures

Ran across this article from Winston Westbrook.

The 2nd wave of foreclosures is coming due to the following 4 reasons:

1. The US unemployment rate is currently at 9.7% according to the U.S. Bureau of Labor Statistics for June 2009. That’s over a 1 percent increase since February and it’s only climbing. In my state of California the unemployment rate is at a whopping 11.6%. The state with the highest unemployment rate is Michigan at 15.2%. My friends, with those high percentages it doesn’t matter how low of an interest rate a homeowner received when modifying his or her loan this past year. If you don’t have a job and can’t get one, you are going to lose your home, plain and simple. Unemployment rates are only expected to rise towards the end of 2009.
2. Homeowners that were denied a loan modification and are currently behind in their payments are creeping into foreclosure.
3. Homeowners in the process of a short sale that did not get approved by the lender are getting foreclosed upon.
4. Sub Prime, Alt A, Prime and ARMS that are coming closer to their resets (please see graph below). 2007 was the last year a majority of these loans were funded. These loans are beginning to reset and with a continued down economy and low property values it will be very difficult for these homeowners to refinance. As you can see in the graph from Credit Suisse it shows that towards the end of 2009 all the way into 2011 a huge wave of mortgage resets will cause a major portion of the 2nd wave or shadow inventory as some are calling it.