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Brace: So Many More Foreclosures Coming, Predicts NYT

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“Foreclosures were bad last year? It’s going to get worse.” That's Morris Davis, a real estate expert at the University of Wisconsin, quoted in a New York Times story that looks at the expected jump in defaults on prime mortgages, ie, mortgages to people with decent credit. The expected jump in foreclosures will come from unemployment, according to the paper, which quotes this frightening estimate: Mortgage defaults are likely jump 60 percent as a result of unemployment in 2009, up from last year's 29 percent figure. Economists are calling this the so-called third wave. Via the paper: "Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher....Among prime borrowers, foreclosure rates have been growing fastest in states with particularly high unemployment. In California, for example, the unemployment rate rose to 11.2 percent from 6.4 percent for the year that ended in March, while the foreclosure rate for prime mortgages." The bigger question mark may be: Where are all these foreclosures going to occur? Will Silver Lake and Venice, which haven't seen huge price drops, see a new wave of foreclosures as laid-off homeowners run out of cash reserves?
· Job Losses Push Safer Mortgages to Foreclosure [NY Times]
· "60 Minutes" Report: So Many More Foreclosures Coming [Curbed LA]