Yesterday, once again I heard a TV reporter say the oft-repeated lie:
“The economy is improving!”
Here’s another reason — other than the deceptive 8.2% jobless rate — why the U.S. economy is NOT improving.
Nick Carey reports for Reuters, April 4, 2012:
Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.
But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.
The reason has to do with last year’s “robo-signing” scandal — foreclosure documents were signed without properly reviewing individual cases — which prompted banks to hold back on new foreclosures pending a settlement.
After major banks eventually struck that settlement with 49 U.S. states in February, the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.
Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28% in January.
But there’s one big difference between previous foreclosures and this second wave.
The foreclosures in the early years of the housing crisis were dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income. The foreclosures in 2012 will bes mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.
“The subprime stuff is long gone,” said Michael Redman, founder of 4closurefraud.org. “Now the folks being affected are hardworking, everyday Americans struggling because of the economy.”
So how much more foreclosed properties are about to hit the market?
Durden points us to RealtyTrac’s data suggesting that there are at least 1.6 million homes that are just waiting for a green light to be foreclosed upon, sending shadow inventory in the double digit millions, and unleashing a selling wave unlike any seen before:
Foreclosures will eventually come, as banks, first slowly, then very, very fast, start sending out foreclosure notices. What happens next will be entire neighborhoods with “Foreclosure” signs in front of the houses … Which for anyone who has taken Econ 101 means prices are about to take yet another dive lower, and the entire housing recovery plan can be scrapped.
So much for “The economy is recovering!”