New Wave Of Foreclosures Looms

Washington, DC, May 26, 2009--Rising job losses are leading to rising home foreclosures nationwide, shifting from subprime borrowers to those with once solid credit, according to a story in the New York Times.

With many economists anticipating that the unemployment rate will rise into the double digits, foreclosures are expected to accelerate.

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.

“We’re right in the middle of this third wave, and it’s intensifying,” Mark Zandi, chief economist at Moody’s Economy.com, told the Times.

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.