Procerity

Liquidity is slowly coming back into the credit markets. Even if banks are reluctant to trust each other, they appear to be trusting the governments providing the backstop insurances. But what does that mean for the average citizen?

Well, as unemployment appears to be increasing, even liquid credit markets will be of little comfort. Just as it appears that mortgage defaults are beginning to level off according to RealtyTrac, a worsening job market now threatens. Efforts by various U.S. States to stretch out the foreclosure process will only delay the inevitable. Many homeowners are hanging onto homes that are worth less than the mortgage they owe. Probably for emotional reasons they are ignoring the fact that their investment in their home is a sunk cost, and irrelevant to making sound financial decisions for their future. Yet those who are “underwater” with a negative equity in their homes may be forced to realize their loss when they lose their jobs.

Procerity’s Prognosis: Expect to see foreclosures climb again as unemployment begins to bite.