Just how bad has it gotten out there? From the Wall Street Journal:
492: The number of days since the average borrower in foreclosure last made a mortgage payment.
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers…
A neighbor of mine not only defaulted on her mortgage but completed her bankruptcy filing…five months later, she just moved because she was tired of waiting for the bank to get around to evicting her. There are so many defaulted loans out there that the banks just can’t keep up – and now with the robo-signing “foreclosuregate” slowing things up even more, it’ll just get worse.
What this does is put a big incentive on people to just give up if their houses are underwater. You can go 16 months without paying mortgage or rent, save money and move on. The credit hit? Big, freaking deal – anyone in credit will tell you that you can finesse your way around that in two to three years (though the negative credit report will remain for 7 years – 10, if you file bankruptcy).
Things in housing will, I think, get a lot worse before they start to get better – there are millions of houses in the “shadow inventory” (foreclosed on, not on the market) and millions more will join them as unemployment remains high and the desire to stay in underwater homes becomes weaker. The bottom, I think, won’t be reached before 2013.
HAT TIP: Mish’s
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