Foreclosure Meltdown

Economic analysts are alarmed as foreclosures hit an all-time high and reach the middle class

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The Dow may have broached 10,000, but home foreclosures hit a record high in the third quarter of this year, forcing 937,840 families out of their homes. Is the economic crisis bearing down on the middle class? With unemployment hovering stubbornly around 10 percent, analysts are concerned that home losses are going to get worse before they get better.

  • Foreclosures Hit the Middle Class  Lita Epstein of Daily Finance says the crisis has moved beyond the subprime mortgage market. "We're not only seeing lenders work through the pent-up foreclosure inventory, we're also seeing foreclosures move to the higher end of the market. In the early stages of the downturn, subprime mortgages were the hardest hit, but now we're seeing more and more foreclosures among prime mortgages, as well as Alt-A and Option ARMs." She has a dour prediction: "Whatever numbers you're seeing now about homes sales, they don't truly reflect the storm that's yet to come. So you can expect house prices to continue to drop in the hardest hit states."
  • Nothing to Do But Take Cover  Scott Jagow of Marketplace is nearly nihilistic about the new numbers. "This week, the Mortgage Bankers Association said foreclosures wouldn’t peak until late 2010. What’s that they told us to do for the earthquake drill? Oh yeah… Drop, cover and hold on."
  • As Goes Unemployment, So Goes Foreclosures  At 24/7Wall Street, Douglas McIntyre says the housing market won't recover until employment is up. "The chief culprit behind the foreclosure trends is clearly unemployment. That will mean that housing has little prospect to improve while joblessness moves above 10%. When people who have stopped looking for jobs and those who are working part-time and would like to work full-time are included, the figure is closer to 16%."
  • More Bad News From the Invisible Recession  Matt Taibbi argues that for ordinary Americans living the recession, gains on Wall Street are meaningless unless they translate to jobs. And he can't understand why "major news" networks won't acknowledge this.
I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the 'On the other hand, so fucking what?' sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.
This article is from the archive of our partner The Wire.