Via the Associated Press:
Millions of Americans are still likely to lose their homes in the coming years, but the foreclosure crisis is finally showing signs of subsiding.
And not to be outdone, we have Reuters via MSNBC:
Foreclosure activity fell in April as lenders repossessed homes at a record pace but started far fewer new actions against struggling homeowners, signaling a plateau in loan failures, RealtyTrac said on Thursday.
Don't you believe that for one second. It's just so much lipstick on a pig.
On April 12, I wrote about a potential second mortgage crunch this year. There are tens of billions in Option ARM's and unsecuritized ARM's scheduled for reset between now and January 11. The Option ARM's are mortgages where borrowers pay very little actual principal and interest, rolling unpaid P&I back into the loan. Once scheduled account caps are hit, the loan "resets," changing the terms and conditions of the loan and potentially forcing borrowers to either make higher payments or go delinquent. Another large chunk of resetting loans are unsecuritized, meaning banks are servicing the loans with no backup from FNMA or FHMC.
If large numbers of these loans go belly up--and many analysts think they could--Who's going to bail them out? There's not enough money for TARP II. I am not a doom and gloomer. As a conservative, I have a predisposition to being optimistic and believing that, left to our own ingenuity, we'll get through any crisis and everything will work out. We'll learn from our lessons and move on.
But we aren't left to our own devices and imaginations, and haven't been in decades. The mortgage and home finance industry is another fine example of social engineering having precisely the opposite effect of what was intended. Who do you think is going to be hit the hardest when all of the dust finally settles? The people who banks would never have financed if government hadn't forced them to.
Extra Point: Read Purple Avenger's take at AoSHQ.