foreclosure

California foreclosures rose 92% in March. Analysts were quick to blame government programs that postponed foreclosures for the sudden rise. Nobody said a word about the newer, more ominous mortgages going past their five-year fixed rate period, although there is little doubt that herein lies the true cause.

Expect more trouble to come. Sure, consumers are spending again. But if you think that will lift the economy, hold on. Without jobs and with more foreclosures to come, it is hard to see how spending can be sustained. Sure, people are spending, but you need to ask yourself why?

They are spending because they have money and they have been sitting on it for a long time, holding their breath. Now it is time to let go. This letting-go is likely to last a bit longer as everyone is eagerly awaiting the recovery and making -wishful thinking- statements about it. There is little doubt we will see a bounce and that bounce may well last into summer.

With the advent of spring, reproductive juices are flowing and that always leads to more optimism, more joy, and more spending. When spring gives way to summer and no jobs appear reality will surely intervene sooner rather than later.

rejoice, the recession is over...NOT

It is all over the news. The GDP grew by 3.5% in the third quarter putting an end to longest recession in recent history. Some experts are quick to point out that the "real" number might be even higher. Wow, it is finally over? Drink the koolaid while you can.

There are a few experts who are more cautious and who do worry that the good news may be a bit premature. They point to such factors as government spending and cash for clunkers. They also see other worrisome signs. Such as the fact that 1/20 houses in Las Vegas is in foreclosure. Or that the foreclosure wave is spreading to such far out places like Biloxi, MI, or Sioux Falls, SD, or Lincoln, NE. Should that worry you?

In Merced, CA, 1 in 27 properties is in foreclosure for a total of 3,092 units. Vegas has 40,408 units receiving a notice. Despite optimistic news from the nation's realtors, the negative amortization pay-as-you-go mortgages are still not factored in. Most of these are just starting to reset to their "real" monthly payments. These "real" payments are so far out of whack that we can expect that the vast majority of home-owners won't be able to pay them. Or they won't want to pay them now that their property is so far under water.

They certainly won't be able to pay if they are losing their jobs or have lost their jobs recently.

Unemployment is still rising and a new wave of big layoffs is coming. I am sure that will do wonders for foreclosures, and consumer spending. Christmas is coming and what a Christmas it will be!

Whatever the GDP might say, don't believe it. We are not out of the woods yet. Not by a long shot!