Foreclosure Tsunami 2.0 Is Coming, And Is About To Kill Any Hopes Of A “Housing Bottom”

Housing ‘Bottom’ about to drown in a new wave of foreclosures.

“In what appears to be surprising news for some, Reuters has an article titled “Americans brace for next foreclosure wave” whose key premise is that “a painful part two of the [housing] slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.” Thank the robosettlement, where in exchange for a few wrist slaps, contract law was thoroughly trampled by America’s attorneys general, but far more importantly to the country’s crony capitalist system, the foreclosure pipeline was once again unclogged, and whether one does or does not have a legal title on a given house, the banks are now fully in their right to foreclose on it. What this means also is that America’s record shadow housing inventory, which is far greater than any fabricated number the NAR reports on a monthly basis, is about to get unleashed on buyers, shifting the supply curve much further to the right, as up to 9 million new properties slowly but surely appear on the market. And while many will no longer be able to live mortgage free, forcing them to go out and rent (and no longer be able to afford incremental iGizmos), it also means that the prevalent price of homes is about to take another major tumble, making buffoons out of all those who, once again, called for a housing bottom in early 2012. Here’s the simple math: there will be no housing bottom until the 9 million excess homes clear.”

Shadow inventory about to go vertical

Two comments re: the bolded portions above. First, the legal principal protecting your property from unreasonable seizure has now been dismantled and absent a Supreme Court miracle gone forever. In fact holding clear title to a piece of property doesn’t even protect you from some bankster underling who carelessly decides its your property they want. And because the MERS three-card-monty game has been legitimized getting title insurance is about to get way more complicated or very expensive… most likely both.

Second I was talking with a friend yesterday who’s company is working on the Govt’s REOs to rentals program and he told me that the 9 million number understates the real size of what’s coming by 25-30%, in other words in their view it will likely be somewhere between 12 and 15 million more foreclosures until the overhang is cleared out.

See the whole Zero Hedge post here: The Second Foreclosure Tsunami Is Coming

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