Home Foreclosures Up in April: 4 Reasons It’s Going to Get Worse Before it Gets Better

According to the CNN.com article, Foreclosures: ‘April was a shocker’:

. . . [foreclosure filings ]rose 32% compared with April 2008. . . . There were 63,900 bank repossessions, the last stop in the foreclosure process. More than 1.3 million homes have now been lost to foreclosure since the market meltdown began in August 2007.

And, it seems that it’s only going to get worse. Why?

4 Reasons Home Foreclosure Numbers Are Only Going to Get Worse

1. Many Homeowners Are Under Water: Home values continue to drop; foreclosures, in part, contribute to this. How? When a home goes into foreclosure, it affects the value of the surrounding homes because many times the property is sold for below market value.

In case you don’t know, being under water means that a homeowner owes more on the property than it’s worth, which brings us to the next reason the foreclosure crisis is only liken to deepen before it gets better, ie:

2. Many Homeowners Are Walking Away: More and more homeowners are doing the “jingle mail” walk, ie, mailing the keys back to lenders and walking away from their homes  rather than continue to dig themselves deeper in debt. And, they’re not the only ones. Banks are walking away from some foreclosed properties as well.

3. Unemployment Remains High: Job losses are a major contributing factor to many losing their home to foreclosure. After all, the mortgage is usually the biggest expense many have. Until the economy turns around, more foreclosures are on the horizon.

4. No Financial Safety Net: Finally, many homeowners live from paycheck to paycheck. They have no financial safety net. For many, the home was usually it. Eg, they could use the equity in their homes for emergencies, home repairs or car repairs. But, as mentioned above, with so many homes having no equity at all, this financial safety net is non-existent.

One housing expert was quoted as saying that he thinks the foreclosure crisis won’t peak until 2012. He may be right. In our next post, we’ll discuss how/why as many as 700,000 home foreclosures have yet to hit the market. This makes the crisis deeper than it appears even now.

P.S.: Learn now to buy foreclosures cheap — as cheap as $45/month — really!

Copyright © 2009 Yuwanda Black for Foreclosure Business News