RealtyTrac reports that the third quarter of 2010 set a new historical record, marking the largest foreclosure activity ever – with foreclosures exceeding 100,000.
And though these foreclosure numbers are horrendous, we can expect a drop in foreclosures in the fourth quarter, resulting from the freeze instituted by banks across the country. Our guess is this will somehow be manipulated as good news that the mainstream media can run with. We can picture the headlines now: “Foreclosures down 90% in 4th quarter 2010.”
This may sound good if you’re a politician trying to convince the masses that your policies are working.
But the flip side to the coin is that sales of foreclosed homes are actually about 1/3 of the existing real estate market. RealtyTrac reports (via Zero Hedge):
“…if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows — causing more uncertainty about home prices.”
Since Wells Fargo and others have essentially halted the sale of all foreclosed or pre-foreclosed properties, this 1/3 of the entire real estate market is going to report a big fat zero (or close to it) for the fourth quarter.
Tyler Durden of Zero Hedge says that such an effect would mean “a complete housing market collapse.”
While we have been writing about Wave Two of the real estate collapse for almost a year, it would have been nearly impossible to predict the underlying mortgage transfer systems had so many problems that banks would be forced to actually stop the foreclosure process across the nation, affecting hundreds of thousands of homeowners, as well as potential home buyers.
We may now very well see an accelerated and more severe collapse of the residential housing market than anyone predicted.
Dan Denning at Whiskey and Gunpowder discusses what’s at stake:
“…if borrowers challenge foreclosure proceedings, and if banks (as they have already begun to do) halt foreclosure proceedings nationwide, the process of establishing a market-clearing price in the U.S. house market is frozen. Buyers can’t buy and sellers can’t sell if the ownership of the underlying collateral — the house itself — is in doubt. What sane person would enter a market like this with prices effectively having completely broken down?
As if that’s not bad enough — and it’s nearly as bad as it gets — don’t forget that that there is a whole universe of financial instruments whose value derives from the underlying collateral. Mortgage backed securities…collateralised debt obligations…the value of any instrument whose value is derived from the underlying asset is now suddenly in doubt.
It’s hard to understate what this could mean for financial markets. It could mean another capital crisis in the financial world. It would make 2008 look quaint.”
The mortgage fiasco is just one of several elements ailing the U.S. economy. Add to that the problems facing the US dollar, a dying American consumer, rising unemployment, and personal debt defaults to the equation, and we have a very serious problem on our hands – one that could make the Great Depression look like a cake walk.
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something big is going on with this
They took down http://www.halfpasthuman.com
hopefully it will be back up to get the new report next week.
The “foreclosuregate” crisis is possibly going to be the “straw that broke the camel’s back” in the economy, wondering how this can play out – it can’t be orderly, can it?
possible scenario?
Everybody stops paying their mortgage, who finds that their papers are lost in the MERS system….follow link from previous article…
Banks can’t foreclose…
Squatters take over all the foreclosed properties that can’t be sold?
Everyone who got foreclosed on with fake docs gets mad and sues their mortgage bank…
Banks all close…people burn them down…
Yes, orderly and calm, that’s how it sounds to me!
Comments…..Thesystem is broke far worse than we think.
Keep in mind that the banks have been holding foreclosed property off the weak market in hopes (?) that the prices will rise and reduce thier losses. These properties have been marked to model rather than marked to market. Consequently thier asset value was inflated, but now this latest fiasco might make any value questionable.
These were bank assets and carried on the books as such. Now? We don’t know if they are an asset at all and more importantly, if these aren’t assets then the so-called stress tests are questionable. Just how will these properties be carried on the books.
The same variable rate nonsense is starting on commercial real estate with the mortgages resetting. Dollar to a donut that the same paperwork problem exists with commercials. MERS is gonna bite the banks bigtime.
Keep in mind these mortgage CDOs and thier spawn were sold overseas. You can bet the international community of investors has lost any confidence in the US banking system. Betcha they are gonna cut us loose.
Look for credit to dry up completely. With it goes what few exports we have left. Not that it matters, our number 1 export is licensing and royalties. Source US Dept of Commerce.
when i look at the case-shiller data , expert comments and graphs and look at zillow.com data and graphs i’m absolutely convinced that house values in-general will eventually plummet to more than  half of what they are now. even worse house prices will stagnate at that new low indefinitely.  in my small florida county there are 3,200 houses for sale with more coming onto the market every week. the few houses being bought recently are massivly discounted below current zillow market values. couple this with massive unemployment as well as the fear of unemployment and the outcome is predictable.
many vested interests claim otherwise but i know the handwriting is on the wall -and it isn’t good.
be very careful and good luck…
Comments…..
Does anyone think that MERS was part of a plan to destroy even more of this sinking economy??
People placed at the right places to help hide, destroy, misplace important papers??
……and MSM has been awful quiet on this. Â Â So far, MSM is only talking about it being “sloppy paper work” by the big banks.
This mess is not going away. Â It is about to get very ugly….especially when average American mortgage holder decides making payments may not be necessary any more.
This is what we get, when we  let them paper  over the first wave of financial crime , committed by the Feds and their Bankster masters, back in 2008.   All those involved should be publicly hung……imho.
Yeah, the key to this puzzle are the MBS. No way to separate the good paper from the bad. Louis Ranieri, father of the Mortgage Backed Security, where are you now? lol
Thing is the Obama Admin botched this operation from the start. Should have used the good bank / bad bank scenario from ’87. Now let this thing tank. Press the reset button and go to a precious metals system. Works for me.
Hey Mac, are you changing the site around or is my browser going whaco?
Obama was one of 4 Senators who wrote and submitted the bill that allowed Fanny Mae and Freddie Mac to cover all those high risk loans. Those Senators got generous campaigne contributions and then gave Fanny and Freddie generous bailout packages.Â
Great comments all! thanks for sharing your thoughts.
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Thanks!
mac
I agree with much of what you all have written here but I think you are forgetting the most important detail of all….. The Banks own our government! Though it will be completely illegal, unconstitutional, and even against the maga-carta…. Our congress will legalize this whole mess within the next few weeks, as soon as the election is over. They’ll pass a sweeping law that says basically that if the banks say they own something….then THEY DO!
It will cause chaos and perhaps wake up the sheeple who still believe their government works for them and are just a bit incompetent. Now they’ll know that they work for bankers, large corporations, and foreign interests. Maybe something will change once that all sinks in. Doubt it though. Pretend Capitalism will die though. Long live open Fascism!
This is the biggest cover up ever.