Unemployment Driving More Foreclosures Than Subprime

Subprime lending standards are being outflanked by unemployment as the driving force in residential foreclosures.

Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody’s Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.

The mortgage modification race really was a temporary patch, and that is why so many modified mortgages fall behind again even after being modified. I discussed this briefly a few months ago, and also raised the issue of unemployment being a far bigger concern than managing to modify mortgages.

In large part, this is the same issue with commercial properties. TALF, PPIP, etc. etc. will all help provide some stability to the market in one sense, but vacancy and falling rents are really the underlying factor for the distress.

[via WaPo]

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• 90-Day Foreclosure Moratorium Kicks In Tomorrow
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Comments

Commercial real estate in Kansas City August 21, 2009

Mortgage modification was the talk earlier in the year, now it is already starting to fizzle. Mortgage mods for the right circumstance might seem like the right choice but does it do enough or change the borrowers personal situation enough to help in the long term? Sounds financial advice and common sense seems like a better potential solution.

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