Foreclosures will cause US home prices to fall this year as lenders buck federal pressure to modify loans, according to a report from Standard & Poor’s Financial Services.
'The mortgage crisis may be far from over,' Diane Westerback, a managing director at the firm, wrote in today’s report. 'The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.'
Loan servicers that collect mortgage payments and oversee foreclosures will ramp up attempts to repossess properties after seeing about 70% of modifications fail in the last six months, according to Westerback’s study. It will take almost three years to sell all the properties that will be seized by lenders, even if no other mortgages become delinquent, S&P said.