Foreclosures on the increase for Luxury Homes

According to the Mortgage Bankers Association, delinquencies continued to climb, even in the luxury homes sector, with a new record being set since records began being kept, in 1972. And the disturbing fact is that these increases are being driven by prime loans. Jay Brinkmann, MBA’s Chief Economist said,

While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosures on subprime ARM loans.  The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts.  A year ago they accounted for one in five.  While 41 states had increases in the foreclosure start rate for prime fixed-rate loans, 43 states had decreases in that rate for subprime adjustable-rate loans. MBA full report

The quantity of bank owned property continues to increase, and the banks are still being some what “reluctant,” to implement the Federal Government’s “Making Home Affordable,” initiative. Odd that – any one would think there was a slight conflict of interest here. Bank of America managed to modify a staggering 4% of mortgages that are more than 60 days in arrears.

Seeing as they were one of the biggest recipients of taxpayer bailout money, one might ave thought they had some sort of obligation to their customers? No? Of course not. The big US banks are currently the largest owners of property in the country and the simple fact is – they can continue to refuse to modify loans and hold massive stocks all the time the government continues to bail them out. And if you are starting to get a bad feeling about this – you would not be alone.  The “liquidity crisis,” continues to put pressure on the credit markets and one has to question when “enough is enough.” Just exactly how much real estate inventory can the banks be holding before they collapse again? Because they are certainly not in a hurry to sell at “market prices.”