To cap off a nightmarish week on the housing front, everybody's favorite ratings service Standard & Poor's says the "shadow market" of foreclosures and distressed homes will haunt our neighborhoods for at least four more years.
S&P says that although the shadow market peaked in the first quarter of 2008, it's taking increasingly longer to clear out the backlog and stop the toll it's taking on our home values.
At 49 months, the estimated average time to clear foreclosures and distressed homes in the fourth quarter of last year was up 11 percent from the previous quarter and 40 percent from the previous year.
According to the report, the lag time to close problem properties has lengthened in all 20 of the nation's largest metropolitan housing markets with the lone exception of Miami. And at 49 months, Atlanta is the fastest in the field; the ratings company estimates it's going to take 59 months in Seattle, 71 months in Boston and 130 months in New York. That's nearly 11 years of inventory in New York alone!
What's the holdup? S&P places the blame on lenders dragging their heels in liquidating foreclosures and distressed homes, not on any increase in shadow market inventory.
S&P defines the shadow market as properties where the borrower is three months or more delinquent on their mortgage payment, properties that are currently or were recently in foreclosure, and properties that are real estate owned, or REOs.
The S&P report follows a triple whammy of bad housing news last week: residential mortgage delinquencies rose, new-home sales fell 0.7 percent in July and new-home construction starts slipped 1.5 percent in July.
Oh, and about those lenders: Last week, the nation's largest banks, including Bank of America, JPMorgan Chase and Wells Fargo, launched a full-scale lobbying campaign to convince the new Consumer Financial Protection Bureau to grant them immunity from lawsuits arising from their mortgage practices.
We certainly wouldn't want the lenders who shelled out billions of dollars in high-risk mortgage loans, commodified the bum deals and almost single-handedly brought our financial system to its knees to be held responsible for their actions, now would we?
Crazy talk like that just might prevent them from doing it again!
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