The Washington Post

How much will foreclosures rise this year? A lot.

(Carlos Barria/Reuters)

The drop comes because the market will be working through the backlog of homes that had been held up before the mortgage fraud settlement was finalized in February. But the sudden glut poses risks for the economy, Chen says. “As long as home prices are falling, the economy is at risk of falling into another recession, because people are going to be nervous about buying homes.” That said, the economy — along with other parts of the housing market — has shown other signs of picking up, so Chen still expects the overall economy to expand in 2012.

The more hopeful scenario is that deep-pocketed investors are becoming interested in buying up distressed homes in bulk, and they could see this sudden rush of foreclosures as an opportunity to make some big deals.


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