Writer Steve Brandt asks in today's (6/17/09) Star Tribune if some of the numbers we are beginning to see showing a moderation in the number of foreclosures in Minnesota are a trend or just a blip.
The full article, "State home foreclosures drop: Trend or just a blip?" is available on-line, here.
The question is a great one. It's true that there has been a decline in the number of foreclosures when we track year-over-year numbers between 2008 and 2009. Is this a sign that things are getting better?
Noone has a crystal ball that can accurately predict where things are going... and Steve Brandt's article certainly reflects that.
While things may not be as bad in 2009 as they were in 2008, here are some thoughts on why we are probably not nearing the end of the foreclosure issue in Minnesota quite yet:
1. The Center's 2008 counseling data shows that OVER 50% of the homeowners that sought mortgage assistance in 2008 did so due to a job loss or a loss of income. Given that the current economic climate is certainly not showing any signs of a quick recovery, the number of homeowners affected by the downturn, and in turn struggling with their mortgage, will probably continue unabated.
2. Data has shown that there is a HUGE number of ALT-A and even Prime mortgages whose introductory rates are set to recast in late 2009, 2010 and even 2011. (Image below show NATIONAL numbers - the Federal Reserve Bank of Minneapolis has some Minnesota-specific numbers here.). Given that the current housing market won't allow many of these homeowners to refinance out of these products, we will probably see another wave of foreclures - - this time focused in the suburban and ex-urban areas of the Twin Cities metro - where many of these loans were originated.
Any other thoughts? Feel free to leave a comment if you have other reasons that may affect Minnesota's foreclosure numbers in 2009 - - or even if you totally disagree with the reasons posted here.
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