Foreclosures destined to slam real estate market

According to the article "Foreclosure Firestorm Ahead", Foreclosures did not surge in April because the banks simply didn't have the workforce to process all the troubled loans after the moratorium had caused a backlog of distressed properties.

Foreclosure Firestorm Ahead?
Posted By:Diana Olick
http://www.cnbc.com/id/30687618

CNBC.com
I’m hearing some elevated chatter in the blogosphere regarding elevated rates of foreclosure, and not just the usual monthly bump up. RealtyTrac, one of the leading online trackers of this sort of thing, is releasing its April data on Wednesday, but word from others is that May could be the month that shows just how bad the numbers will get.

Mark Hanson of the Field Check Group, who works with ForeclosureRadar.com, writes, “there is a Pigzilla the size of a freight train in the python and it has worked its way to the lower intestines.” Hanson claims that foreclosures did not surge in April because the banks simply didn’t have the capacity to process all the distressed loans after all the moratoria had caused a backlog. Specifically, he points to Chase and its WaMu loans.

Beginning on May 4th the properties taken to foreclosure in CA surged. For the past few months, WaMu had been on near full foreclosure moratorium. As of May 7th -- only 5 calendar days into the month -- WaMu already has 10% MORE foreclosure-related REO’s than in all of April. At this run rate, WaMu will have a record foreclosure month of 3300 foreclosures in CA alone or 7000 nationally worth approximately $2.5 billion.

Even scarier - Chase [JPM 35.75 1.34 (+3.89%) ] tends to be a leading indicator to what other large bank/servicers do.

I also got a message from the Consumer Credit Counseling Service of Greater Atlanta. Apparently they are seeing a significant increase in the number of people calling for help who have interest-only mortgage loans and are going delinquent. Last year at this time they counseled about 100 per month. Now they’re doing about 800 per month.

The big question is going to be how many of these delinquent borrowers are actually saved by President Obama’s “Make Home Affordable” program. So far there have been no real numbers because everything is supposedly “ramping up.”

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