Study Forecast: Increase Homes on Bank Foreclosure List

by Donald Hanz on Foreclosure Crisis

If the economy will not improve soon, the number of homes on bank foreclosure list will increase three times its current level by the end of this year. This is the dire forecast that the Mortgage Loan Delinquency Rate report provided.

The first quarter report projected that mortgage loan delinquency rates will surge over three times the normal rate before the end of 2009. And if distressed homeowners failed to work out solutions to make their accounts current, foreclosure will follow.

The report noted that loan delinquency, which is the ratio of homeowners who defaulted 2 months or more, will increase by 7 percent, over and above the normal 2 percent level in stable economic conditions.

The expected rise in the number of properties on bank foreclosure list is five times higher compared to the 1.4 percent recorded in the last recession.

According to the report, the increase in loan delinquency rates during the first three months of this year was lower than the figures in the last quarter of the previous year.

However, the first quarter loan delinquency rate of 5.22 percent was 62 percent above the 3.23 percent reported a year ago. Furthermore, the first quarter 2009 increase was the ninth consecutive increase.

According to industry experts, the true foreclosure level is difficult to determine because of foreclosure moratoriums and federal regulations on foreclosure prevention.

Other market reports have been released showing that the expected staving off in the number of properties on bank foreclosure list in 2009 is not feasible. The Center for Responsible Lending reported that foreclosures have reached 1 million thus far in 2009, and with additional 1.4 million projected before the end of this year.

Another report stated that scheduled auctions, default notices and bank repossessions affected about 321,480 homes during May, the third consecutive month that foreclosure filings exceeded 300,000.

The report pointed out that scheduled auctions and defaults declined but bank repossessions rose by 2 percent due to substantial increases in some states, including Arizona, Michigan, Nevada, Oregon, New York and Washington.

Loan delinquency rates that have potential to boost the number of properties on bank foreclosure list were reported in Florida with 11.01 percent and Nevada with 11.61 percent.

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