August Foreclosures Zoom

Those in the real estate industry and others need to perhaps fasten their seat belts in preparation for a bumpy ride based on this CNN Money article (http://money.cnn.com/2007/09/17/real_estate/August_foreclosures_way_up/index.htm?cnn=yes):

NEW YORK (CNNMoney.com) -- Late summer brought no relief from soaring foreclosures. The number of homes in some stage of default jumped 36 percent month-over-month in August, according to a regular monthly survey. Delinquencies and defaults more than doubled year over year to 243,947, according to August figures released Tuesday by RealtyTrac, a marketer of foreclosed properties. RealtyTrac's forecast is for total foreclosure filings to exceed 2 million this year.

"The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now," James Saccacio, chief executive of RealtyTrac, said in a statement.

Caught in a toxic mortgage

October is expected to be a peak month for hybrid adjustable rate mortgages (ARMs) to reset, with the interest rates on some $50 billion worth of loans poised to go up dramatically. In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.

The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation. Nevada led all the other states in the rate of August foreclosure filings: one for every 165 households for a total of 6,197. Other hard-hit, sun-belt states were California (one in 224), Florida (one in 243), Georgia (one in 271), Arizona (one in 289), Colorado (one in 312) and Texas (one in 532).

I truly do not believe that our elected politicians understand how much of a drag this will be on the economy or how devastating this situation will be for thousands and thousands of families. Oh course, I suspect the Chimperator Bush is off in la la land when it comes to appreciating the magnitude of the problem.