A new report predicts that the number of foreclosures will fall next year. But until then, “housing markets will continue to take a beating.”
Foreclosures will peak at about 2.75 million this year, according to the University of Michigan. The report, which was prepared with the help of risk-management firm University Financial Associates, is issued quarterly and analyzes “representative mortgage loans in the serviced portfolio of all mortgages outstanding and estimate the probability of default and prepayment for each zip code in the United States.”
The peak follows four years when filings increased by more than 30 percent each year.
But during 2010, only 1.75 million foreclosures are predicted by the university. The projection is the same for the following year.
By 2012, U.S. foreclosures are expected to drop below 1.50 million.
The bright outlook was attributed to an improving economy, slowing home depreciation and a recent tightening of underwriting.
“For the time being, however, steep increases in unemployment are continuing to mitigate the positive factors, which means that housing markets will continue to take a beating for some time, despite federal stimulus incentives,” Dennis Capozza, professor of finance and real estate at Michigan’s Ross School of Business, said in the report.
