More Foreclosures, More Bank Failures, Big Trouble for the FDIC
August 11th, 2010Via: Yahoo Finance:
The U.S. housing market continues to send mix signals. More homes continue to enter foreclosure but the number of homeowners carrying so-called “under water mortgages,” declined in the second quarter, Zillow.com reported Monday.
21.5% of homeowners owed more on their mortgage than their home was worth in the second quarter, that’s down from 23.3% in the first quarter and 23% a year ago.
“There are a lot homes caught up in mortgage modifications,” explains Richard Suttmeier of ValuEngine.com, which he says results in a temporary stability in home prices. The key word: temporary.
“There’s waves of more foreclosures coming in the housing market because very few of the HAMP modifications are becoming permanent,” he says.
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The ‘negative feedback loop’ is going to lead to more bank failures and that leads to another problem – a lack of money in the FDIC Insurance Fund.
