"A new research piece from Barclays raises some far reaching implications.
Many economic pundits forecast the housing market will bottom in 2012 and start recovering thereafter. I’d like to know exactly how that happens when the odds of a Eurobanking crisis is the next six months look high, and it’s bound to blow back to the US.
But even the more realistic pundits (meaning those not in the employ of financial firms) may be unduly optimistic. For instance, Martin Wolf was one of the hosts of a Financial Times conference last week, and mentioned that he thought whoever would win in 2012 would look like a winner: the recovery will eventually take hold, and he believes, per Carmen Reinhart and Kenneth Rogoff, that the housing market will bottom in 2014 and a recovery will kick in then.
The person sitting next to me leaned over and said, “Japan”. And he is more likely to be right, for two (at least) two reasons. The first is, as the Barclays report indicates, via American Banker, that there is a very large shadow inventory and that is not adequately reflected in most tallies of how many homes will need to clear, ex more radical action to stem foreclosures (I would not hold my breath on that one). Second is that the inability to foreclose and the resulting “zombie” mortgages are not due simply to servicer discretion but due to likely difficulties in foreclosing due to chain of title problems. Why have foreclosures slowed down dramatically in New York, for instance? Because it appears that the requirement that the foreclosing attorney certify the accuracy of documents submitted to the court has thrown a wrench in the process. Now mind you, this measure does not increase the liability an attorney faces, but it makes it easier for opposing counsel to challenge the validity of submissions to the court (and false submissions are sanctionable)..."
at http://www.nakedcapitalism.com/2011/10/zombie-mortgages-mean-delay-of-housing-and-economic-recovery-well-past-2014.html
Many economic pundits forecast the housing market will bottom in 2012 and start recovering thereafter. I’d like to know exactly how that happens when the odds of a Eurobanking crisis is the next six months look high, and it’s bound to blow back to the US.
But even the more realistic pundits (meaning those not in the employ of financial firms) may be unduly optimistic. For instance, Martin Wolf was one of the hosts of a Financial Times conference last week, and mentioned that he thought whoever would win in 2012 would look like a winner: the recovery will eventually take hold, and he believes, per Carmen Reinhart and Kenneth Rogoff, that the housing market will bottom in 2014 and a recovery will kick in then.
The person sitting next to me leaned over and said, “Japan”. And he is more likely to be right, for two (at least) two reasons. The first is, as the Barclays report indicates, via American Banker, that there is a very large shadow inventory and that is not adequately reflected in most tallies of how many homes will need to clear, ex more radical action to stem foreclosures (I would not hold my breath on that one). Second is that the inability to foreclose and the resulting “zombie” mortgages are not due simply to servicer discretion but due to likely difficulties in foreclosing due to chain of title problems. Why have foreclosures slowed down dramatically in New York, for instance? Because it appears that the requirement that the foreclosing attorney certify the accuracy of documents submitted to the court has thrown a wrench in the process. Now mind you, this measure does not increase the liability an attorney faces, but it makes it easier for opposing counsel to challenge the validity of submissions to the court (and false submissions are sanctionable)..."
at http://www.nakedcapitalism.com/2011/10/zombie-mortgages-mean-delay-of-housing-and-economic-recovery-well-past-2014.html
