Wikinvest Wire

The new foreclosure trend - non-foreclosures

Wednesday, March 17, 2010

From the recent Lender Processing Services report(.pdf) comes the chart shown below depicting the latest foreclosure trend - non-foreclosures. That is, where borrowers stop making mortgage payments but stay in the house.
Does anyone know of any estimate of the impact of this extra cash on such things as consumer spending within the GDP data? Here's my back-of-the-envelope calculation for Q4:

  • 3 months x $1,000 a month x 711,214 households x 75 percent = $1.6 billion
Assuming these "homeowners" bought things with 75 percent of what they didn't pay in mortgage payments, this would account for about 2 percent of the increase in personal consumption during the fourth quarter - not really significant, but it sure didn't hurt.

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Ted S. said...

Those 12 and 18 month increases are stunning - almost one in five homeowners who are a year and a half behind on payments are still in their house?????

Anonymous said...

What defaulters don't pay on their mortgage, the taxpayer is paying instead. Its a zero sum game as far as consumer spending goes. The rest of us get to spend less, so they can spend more.

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