Mortgage Foreclosures up 90% in May

Compared to May 2006, foreclosures on mortgages were up an astonishing 90% this past month.  Some parts of the country were worse off than others ( noticeably, California ), but as a whole the picture was very ugly.  Why the massive jump in foreclosures?  Well, a couple reasons.  For one, many ARM’s have been resetting.  With the rise in mortgage rates, some people’s mortgage payments are jumping several hundred dollars per month.  For those who purchased on the hairy edge of what they could afford, that spells disaster. 

For another, I feel the entire housing market is vastly overpriced.  Some people stretched themselves too thin buying a house, and even without an ARM reset, they find they are simply unable to keep their heads afloat.

Buying a home isn’t for everyone, and the foreclosure jump is proving that.  I expect many more months of the same, followed by a massive price correction in the housing market.