According to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina, there are more than 6,600 home foreclosure filings per day in the US, and with two million this year alone, the flood shows no signs of abating. Foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment. Michael Barr, the Treasury Department’s assistant secretary for financial institutions, said in congressional testimony last month that more than 6 million families could face foreclosure over the next three years.
“The recent crisis in the housing sector has devastated families and communities across the country and is at the center of our financial crisis and economic downturn.” A recent pickup in sales and home prices in some regions has been heralded as a sign that the crisis in residential real estate may be close to bottoming out, after the steepest price decline since at least 1890. But nearly half of recent sales have been attributed to foreclosures or “short sales” at bargain-basement prices. The Center for Responsible Lending says foreclosures are on track to wipe out $502 billion in property values this year.
Jobless claims down
The Labor Department says initial claims for state unemployment benefits dropped 33,000 to a seasonally adjusted 521,000 in the week ended Oct. 3, the lowest level since early January. Analysts polled by Reuters had forecast new claims slipping to 540,000 last week from a previously reported 551,000. A Labor Department official said seasonal factors expected a decline in new claims at the end of a quarter and a rise at the start of a new quarter. “The labor market is improving, but rather slowly,” said Cary Leahey, economist at Decision Economics in New York.
“Both the initial and continuing claims numbers suggest that October ought to be a better month for payrolls than September.” The claims report will help to calm fears of deterioration in the labor market after data last week showed U.S. employers cut more jobs in September than had been anticipated by the market. The unemployment rate rose to 9.8 percent in September, a 26-year high. Economists reckon the Federal Reserve will probably refrain from raising interest rates, currently near zero, until the jobless rate peaks.
BOA increases loan modifications 62%
Bank of America (BOA), which faces lawsuits and investigations by lawmakers and regulators over its takeover of Merrill Lynch and a bonus scandal, increased the number of customers with a trial mortgage modification by 62% in September to 95,000, according to CNBC. It also increased the total number of modification offers under the Home Affordable Modification Program to 156,000 last month, versus 125,338 in August. Today, at about 1 p.m. ET, the Treasury Department will release its third month of data for all of the nearly four dozen mortgage loan servicers participating in the program. The government says it expects 500,000 completed modifications by Nov. 1 (The initial goal was for 3-4 million in the first two years). The BOA document says the bank hopes to account for one quarter of them by the November target date.
