Filed under: JPMorgan Chase (JPM), Housing, Recession
There are a number of theories that claim that until housing prices recover bank earnings cannot get better. Financial firms hold too many home loans and mortgage-backed securities. Another set of theories says consumers won’t start spending as long as home prices and the threat of foreclosures keep them frightened and cautious.
If these things are true, the economy has a long way to go to get superior as U.S. foreclosure in October rose 25% from a year earlier.
The U.S. government and several large banks including JP Morgan (NYSE: JPM) have begun the process of extending payment plans for some homeowners. Many of the programs are even offering lower interest rates to help keep people in their homes. But these effort might only go a tiny way to help solve the problem.
As long as people believe they may lose their jobs, they’ll think about abandoning their homes if things get rough. Feeding kids and keeping gas in the vehicle to get to work might, in many cases, trump keeping up on a mortgage on a home that loses more of its value every day.
Some predictions put unemployment at 9% or 10% toward the end of 2010. As long as layoffs keep marching toward those numbers, foreclosure rates are not prone to drop.
Douglas A. McIntyre is an editor at 247wallst.com.
Foreclosures keep moving up originally appeared on BloggingStocks on Thu, 13 Nov 2008 08:30:00 EST. Please see our terms for use of feeds.
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