Monday, November 29, 2010

WSJ Number of the Week: 492

The Wall Street Journal's Economics Blog, in a post by Mark Whitehouse, has as its "number of the week" the number 492, as in the average of 492 Days from Default to Foreclosure.

The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October, according to LPS. That compares to 382 days a year ago and a low of 244 days in August 2007.

In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.

Some may not be inclined to shed tears for the banks, who recently had to slow down their already-backlogged foreclosure process even more due to the revelations of robo-signing, but Whitehouse notes that this statistic could also provide a powerful incentive to other homeowners:

Millions of Americans still are paying their mortgages even though they owe more than their homes are worth. The more banks’ backlog grows, the more likely they are to join it, adding to the already giant pile of foreclosures weighing on the housing market.

Matt Festa

Financial Crisis, Housing, Mortgage Crisis, Mortgages, Real Estate Transactions | Permalink

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The WSJ quote and Matt's observation is something missed by bank's, their servicers and regulators. The process of debt collection on bad and defaulted mortgages is itself a major cause of abandonment of housing by prime mortgagors turned upside down by price depression which prompts the further abandonment by those owners of mortgage obligations exceeding the foreseeable value of the house securing the loan. In other words, the debt collecting mortgagees are doing business in a way that poisons the well from which they expect to drink. Worst of all, elected legislators are sitting around watching this happen to their constituents but are unwilling to act in any way that would hurt their fund-raising prospects from now legally anonymous people who want to purchase legal immunity from evil business practices.
(Okay, now its decaffeinated for me for the rest of the day.)

Posted by: Kermit Lind | Nov 30, 2010 7:37:11 AM