Foreclosure Wave Threatens Stability of Housing Market

Washington Post
March 12, 2010
Merle, Renae
P. A1

Most of today's delinquent mortgage borrowers are coping with a job loss or other economic hardship and cannot make even modified payments. This reality is feeding concern that another 5 million to 7 million properties will enter foreclosure over the next few years, slowing the housing market recovery process along the way. The new inventory of foreclosed homes dumped on the sale market could undercut housing prices, which have been in an upward pattern since December -- in part due to a slowdown in the release of foreclosures onto the sale market. "Some of the positive housing data may not be signaling a true turning point, as many servicers are holding back on foreclosures and the related houses are not yet being offered for sale," explained Diane Westerback of Standard & Poor's, which co-sponsors the S&P/Case-Shiller home price index. State and local governments are moving to delay the foreclosure process, with Mortgage Bankers Association chief economist Jay Brinkmann noting that sheriffs in some areas have refused to file foreclosure notices. Experts say the impact of the "shadow market" could be mitigated if enough buyers purchase homes, mortgage relief programs help more borrowers, or more short sales are allowed.
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