More bank problems on the horizon!!
By Daniel at 1 October, 2009, 8:45 am
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The bottoming out proces in house prices is only a delay.When the tax credits come to an end and the Fed stops buying mortgages, housing will be right back where it started. In fact, the market might actually be worse off since interest rates have nowhere to go but up and the tax credits have only pulled demand forward.On top of that, there is a “shadow inventory”of foreclosed homes about to hit the market just in time for spring.There are 3 to 4 million homes out there that will need to be dealt with in one way or another. Well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. While that buys time for families,the delays are prolonging the mortgage crisis and creating a growing “shadow” inventory.This inventory is a source of concern and when the supply is unleashed, it could interrupt the bottoming out proces and create a further fall in housing prices and is more work for the FDIC,but the FDIC is running out of money after 140 bank failures. The agency is now proposing to let banks pay 3 years of premiums in order to recapitalize the Deposit Insurance Fund. This amounts to around $10B for the four biggest US banks alone !
doubledutch
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