The Bottom Line on What Realtytrac's Home Foreclosure Information Means for You -- Right Now

When so much bad news about the grim reality of today's housing market is already out there, keeping track of the latest information can be mind-boggling. According to recent Realtytrac reports, the breaking news probably isn't too surprising to those facing home foreclosures, a situation all too familiar for many homeowners.

The bottom line: Foreclosures are up 121 percent from the second quarter of 2007. More than 700,000 households are affected and the Housing Bill may help around 400,000 of them - maybe. This is the highest amount of home foreclosures since the Great Depression of 1930 - more info about that below.

In short, foreclosure rates are at record highs. This info can easily be seen at the Foreclosure Plus RealtyTrac website, here: www.foreclosurepulse.com/archive/2008/07/24/104347.aspx but the news is also everywhere. All you have to do is turn on your television set and see it blaring across CNN or in the headlines of a local newspaper - or perhaps you live on a street with lots of foreclosed homes - or homes that won't sell. Whether homes are lost due to a foreclosure notices, bank notices of repossession or simply put on the auction block, many homeowners are facing the grim reality of some sort of foreclosure related action being taken against them.

What the Realtytrac home foreclosure information and the Housing Bill means for you - even if you don't own a home

Staying up to date on the situation can be crucial. If you want to find out a bit more about how the Housing Biil might help you (emphasis on might), you can see my previous article about that here: www.associatedcontent.com/article/900473/how_a_housing_bill_could_help_struggling.html In a nutsell, the housing rescue package or Housing Bill could give relief to a select number of homeowners. You can read that article to discover if you might qualify for the FHA (Federal Housing Administration) program but that won't help you in the short term - right now.

What you need to know right now, whether you own a home or not

If you're a homeowner you will want to know if you might qualify for the Housing Bill measures that could help you. If not, you may need to face the reality. If you are among the lucky ones who aren't at risk of losing your home, you need to understand that all of us are affected when friends, neighbors and family members face the loss of their home. If you don't own a home or are considering buying a home, you need to research the stability of your bank and potential mortgage lender. Make sure your credit rating is excellent or in the best shape possible. Think about living in a home that might not go up in value for up to 10 years.

Bottom line info you need to know about home foreclosures: whether you own a home or not, you can be affected. Adult children move back in with their parents. Home prices in formerly stable neighborhoods drop. It becomes harder to buy and sell homes. Property taxes are affected.Your home's value may go down. Home equity lines can drop or you can get a sudden notice that you no longer have the equity you once thought you had. These are just some examples of how you could be impacted.

With home foreclosures the highest since the Great Depression of 1930, all of us may feel the ripple effect. That is the grim truth of the latest RealtyTrac information about the housing market

According to Boomberg (see sources at end of article), foreclosures rose 53% in June and Bank Seizures tripled. While this may not be news you want to hear, there are plenty of experts, including Rick Sharga, RealtyTrac's vice president of marketing, who realize that foreclosures are the highest since The Great Depression.

Bottom line info you need to know about the housing market and home foreclosures: the situation is bad and likely to get worse, perhaps for as long as the next decade. When it comes to the sheer number of people affected, 2 million or more could lose their homes and that is a conservative estimate.

How'd things get to the point where Realtytrac's latest information indicated record levels of home foreclosures?

This is where some lessons can be learned that might keep something like this from happening in the future. The American Dream for many is to own a home. As is so often the case, some people simply weren't really in a financial position to be homeowners and got subprime loans even if they had very poor or even downright awful credit histories. Some got adjustable rate mortages or interest only mortgages. There isn't any rocket science to these types of mortgages. Adjustable rate mortages do not have fixed interest rates. Interest only mortgages generally mean that home buyers pay only the interest on their home loan and don't build equity. There are exceptions but these are the basics about how adjustable rate mortages and interest only mortages work. Neither of them have fixed rates and that has an economic impact on the homeowner.

Bottom line info about the housing market and Realtytrac info about home foreclosures: when the interest on interest only loans kicks in, people with tight finances often can't pay the interest. Add rising food prices, higher unemployment, extremely high gas prices and other factors to the economic mix and you have a huge number of homeowners who not only aren't building equity in their homes but are facing a negative equity situation. Their homes are losing value. Period. There isn't any way to sugar coat that reality. This means that 1 out of every 171 homeowners faces the very real loss of their homes. Odds are, you are one of those at risk of losing a home - or know someone who is.

People in states with the highest foreclosure rates - from Nevada to Indiana- need to take heed. All of us should know which states have high foreclosures.

Thinking about moving to Nevada? It had the highest foreclosure rate for the last year and a half. Yep - 18 months. That is way above the national average so if you have dreams of going out there, finding a home and getting a job, you might rethink that...or at least be informed about the situation. California ranked second and other states with high foreclosure rates include Florida, Michigan, Colorado, Ohio, Georgia, Indiana and Utah.

Bottom line: be aware of which states have the highest foreclosure rates. If you've got the spare dollars, this might be time to buy a home but you'd better be sure you have the money to pay the home mortgage for up to 10 years, without seeing your home soar in value in the meantime. Odds are, we are in a severe recession. I've gone through one of those before and it didn't go away overnight. Also, don't count on your home as an investment but simply a place to live. If the price goes up, great. If not, make sure you are comfortable with that reality. Owning a home can bring people peace of mind, as long as they can afford it.

Some banks and homebuilders - including those formerly considered fairly secure- have been suffering huge losses or going under due to home foreclosures

There are too many to list here but National City, a Cleveland City Bank, and First Midwest Bank are among banks that were affected. National City posted a loss of $1.76 billion, a significant part of that connected to brokered home equity, subprime loans and construction loans. Davis Homes, a family-owned home construction and building company since 1985, recently had to announce that it was shutting down.

Bottom line: Check on your bank's financial information. If you don't feel competent to do so, seek the advice of an experienced financial adviser. If you are thinking of building a home, understand the risks of doing so in today's economy. It is possible that you can be faced with homes that are partially built, supplies that never show up or other problems. Now - more than ever - consumers need to be informed and realize that today's housing market doesn't even vaguely represent the market during the home buying and building boom that many thought would never end.

Sources:
1. Realtytrac figures at the Realtytrac Pulse website:www.foreclosurepulse.com/archive/2008/07/24/104347.aspx
2. Foreclosures rise 14% in Second Quarter: Realty Trac and Reuters and CNBC, July 25, 2008: www.cnbc.com/id/25844827
3. Davis Homes Will Shut Operation, July 23, 2008, Indystar.com (Swiatek): www.indystar.com/apps/pbcs.dll/article
4.National City Loss Driven by Loan Outlook, July 24, Luarie Kulikowski, The Street website
5. Realtytrac website: www.realtytrac.com/