Analytical Wealth

In other words, foreclosures increased by 130,647 or by 115.31% on a YoY basis, on top of increasing by 36% from the previous month. Assuming that the Fed’s rate cut would in fact keep additional home owners from going into foreclosure, it would only really help those who are about to get into trouble now, as even a major decrease in your mortgage payment won’t help you if you’re already 1-3 payments behind. In other words, we wouldn’t see an impact for another 4-5 months (assuming no real impact until October's mortgage payments, since we’re more than ½ way through September) down the road. IF foreclosure rates continued to at least match the rate increase from July to August for the next four months (not including this one), we would be looking at nearly 560k foreclosures for the month of January, before the rate cut even started to have an impact.

However, we know the rate cut won’t do much to help housing and we know that ARM resets will start to peak later this year until around March of ’08. So let’s say we see a month over month increase of 18% a month until July of next year, as that’s when the folks who got into trouble due to the March ’08 reset will start to go into foreclosure, the number is a scary 1.5 million foreclosures in a month.

Now to be honest, I don’t see the 1.5 million foreclosures in a month scenario happening as I think the rate of increase will level off. But then again, there are just so many people in houses they can’t afford and it’s unknown (at this point) how many people will be saved by Government intervention, refinancing, etc, that’s it’s just hard to tell. Still, hitting 500k foreclosures in a month is starting to look like a frightening reality.