Banks have been busy foreclosing and it won’t be over for a long time. They waited for the administration to come out with its program, which turned out to be a nice hand-out to the “servicers” but nothing that could actually stem the wave of foreclosures that must happen in order for markets to get back to normal. 2010 will bring with it the foreclosures that should have happened in 2008 and 2009 along with the foreclosures related to Option ARMs that will have to be dealt with in 2010 and 2011.
The governments PPIP plan will have little affect on this.
Believe it or not as bad as this is, its also a good sign – the market needs to be purged of homes that can’t be paid for by borrowers, however the process that is set up now is not good. There are homes that should not go into foreclosure for purely economic reasons that will go into foreclosure and make a bad market worse.
As for the stock market, there is no way to know the effect, it could be bad or the market may react to other news – with the amount of money being pumped into the economy we’ll have to see some recovery, even if its not built on something that can last.
Scott Dauenhauer CFP, MSFP, AIF