Over a year ago, a co-worker told us how she had caught neighborhood boys climbing into the second story window of the house next door. She confronted the group of 10- and 11-year olds and took one home to his parents.
Then she tried to inform the people who owned the home. This proved difficult because the people who had lived there – the ones who’d been to neighborhood block parties and shared cool beverages after mowing the grass – had left in the middle of the night to escape foreclosure.
She tracked the previous owner down but they didn’t care. The house was no longer their concern.
The bank didn’t own it either. The loan was in the cloud of securitization, owned in part by thousands of investors, but really owned and controlled by no one.
And so foreclosures go in the state of Florida and around the country. This weird dormancy, where true ownership and the right to negotiate on the loan are unclear, has caused foreclosures to build.
In Florida alone, there are 360,000 unresolved foreclosures. One in six homes is empty.
The state of New York has over 100,000 foreclosures in process. The numbers around the country are in the millions.
What we’ve seen to this point is nothing compared to what lies ahead. There’s a tidal wave of foreclosures heading right for us. It has not washed up on our shores yet, but it will… soon.
You see, Florida, New York and California are now taking steps to speed up the foreclosure process. This will require lenders to move homes into foreclosure even when they don’t want to (who wants to take back a home worth a lot less than the loan?). Eventually they’ll have to move the home into the selling queue.
This activity will reverberate through the economy. Banks will have to write down loans and increase loan loss reserves, pushing property values even lower in hard hit neighborhoods.
This will put even more pressure on solid, bill-paying consumers that have kept up their payments even though their homes are underwater and their incomes are faltering.
Our debt-laden society has yet to tackle the biggest issues we face. The last three years have seen a lot of attempts to paper over the problems. We’ve heard a lot of lip service about modifications and adjustments. But the story isn’t over. In fact, it has barely begun.
As the next chapters are written and the foreclosure tsunami slams into us, be very careful about the banks you work with and the property you own. You might find yourself in a neighborhood where you have to chase the local kids out of the vacant home next door.
Best of success,
Editor, Survive and Prosper
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