Foreclosure starts will subside in 2010

After rising over 30 percent a year for the last four years, foreclosure starts will finally begin to decline next year, according to University Financial Associates LLC (UFA), a risk management firm that forecasts mortgage and consumer loan performance by zip code. The latest research by the Michigan-based company indicates that national and local economic conditions-including a reviving economy, slowing house price depreciation, and tighter underwriting of recent loans-will lead to a decline in foreclosures in 2010.

A number of factors affect expected default rates on constant-quality loans, UFA said. The most important being local economic conditions. A recession causes an erosion of both borrower and collateral performance, the firm explained. And in an economic downturn like the present, borrowers are more likely to be subjected to a financial shock such as unemployment, and if shocked, will be less able to withstand the impact.

Source: Carrie Bay, DSNEWS.com

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