The foreclosure rate has taken a dramatic tick upwards.
This puts downward pressure on home prices which in turn causes more foreclosures.
Flooded by foreclosed properties, which cost banks on average more than $40,000 each, banks have taken their time in putting such properties on the market, not wanting to flood the already weak market and drive prices down further.
I bank at Bank of America. They don’t want poor customers like me. I get charged $14 a month in account fees if my checking account balance ever falls below $1500.
Analysts have predicted banks will face more claims if home prices continue to decline and foreclosures keep rising. Default notices sent to overdue U.S. homeowners surged 33 percent in August from the previous month, and total foreclosure filings increased 7 percent, according to a Sept. 15 report from RealtyTrac Inc., the Irvine, California-based data seller. The increase in default notices was the biggest monthly gain in four years.
Collectively, that leaves investors with little certainty on how big the tally may become, according to Barofsky, the former TARP official and now a senior fellow and adjunct professor at the New York University School of Law.
“I don’t think anyone knows where the bottom is for all these costs,” he said.