August 19, 2009
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.
- Mortgage Modification Talk Swirling
- US Office Vacancy At 5-Year High; Rents Plummet
- 90-Day Foreclosure Moratorium Kicks In Tomorrow
- RREEF, RREEF, and RREEF
- Treasury Reworking Tax Rules to Help Dampen Commercial Real Estate Fallout