2. The Foreclosure Outlook for 2016By Carlos Gamino

Goldman Sachs recently agreed to pay $5.1 billion in claims stemming from its role in the 2008 mortgage crisis, where banks inappropriately gave junk loans disproportionately high ratings, and did not downgrade the status of the loans until they were bought from the banks by the general public. Even though $1.8 billion dollars of the Goldman Sachs settlement will be given to foreclosure relief programs, will it be enough to stave off another housing crisis?

Although the Officer of the Controller of the Currency lists 94 percent of mortgages as “current,” there are still others who speculate another housing crash is right around the corner. The deputy assistant secretary for financial stability of the Treasury Department, Mark McArdle, admits that multiple states are “still struggling” with foreclosure.

There are nearly 400 ZIP codes in the US where 43 percent to 76 percent of properties are heading toward foreclosure.

In fact, 35 percent of homeowners in most states could not make their mortgage payments, even after receiving federal foreclosure assistance. These numbers are higher in Mississippi (44 percent), Louisiana (42 percent), and Nevada (40 percent). With the government pumping tens of billions of dollars into the housing market, how can these states still experience a high level of re-defaults?

Many feel that the government has not adequately handled the housing market bailout of 2008. As Kathleen Engel, a professor at Boston’s Suffolk University Law School, points out, “these mortgage modifications were not affordable long term.”

She, along with many others, feel that the 2008 collapse damaged real estate values beyond repair, and that no amount of long-term funding can prevent the next inevitable wave of foreclosures.

What Do You Think?

I’d love to hear your thoughts on the housing crisis and where we’re headed. Feel free to share them on my Facebook page or Twitter!

Carlos Gamino