Foreclosures Rise 48% in May

The evidence continues to pile up regarding the housing/mortgage lending crisis and its effects on the banking system.

Lehman Brothers, of ALL people, is out with a report about how bad it could get.

Foreclosures add to inventory and crowd out regular sales, Michelle Meyer and Ethan Harris, economists at Lehman Brothers Holdings Inc. in New York, wrote in a report yesterday. Foreclosures will account for 30 percent of national home sales this year as 1.2 million foreclosed single-family homes will eventually enter the market, they said. They estimate that foreclosed properties, which typically sell for about 20 percent less than other homes, will depress home prices by 6 percent.

30% ?  Really?  (And why is it you guys can see this now, but not when you were raking in bizzilions in trading ad underwriting fees for mortgage securities)  Does that include short sales (Deals made before the foreclosure process with the cooperation of the homeowner)?  Does that include technical defaults that the mortgage servicers have not foreclosed because there are no buyers in those markets (Detroit, Vegas, South Florida, etc...)?  NOPE!!!

The report has some particularly amusing anecdotes:

``The risk is that an adverse feedback loop will develop, in which problems in the housing market undercut the economy, causing even more stress in the housing and mortgage markets,'' Meyer and Harris wrote.

YA THINK?  Take out the first 4 words in the above quote, and then add a little color to the rest of their dry prose, shake, bake and outcomes the banking collapse.

BTW, Dearest readers, Thank you for some very helpful links to hard, telling, and informative data.  Please keep those coming (Now if I can just get folks to STOP sending me opinion/puff pieces designed to manipulate the unwashed).

More soon.  

Mentatt (at) yahoo (d0t) com