by Calculated Risk on 10/24/2006 01:18:00 AM

From the Milwaukee Journal Sentinel: 4 times as many home foreclosures predicted

Up to 4% of America's mortgaged homeowners might lose their homes to foreclosure in coming months, one of the nation's largest lenders predicted Monday, as those homeowners find themselves trapped by heavy debt and the housing slump.

That's four times worse than the historical average of 1 in 100 mortgaged homeowners who fail to keep up payments, said Michael W. Perry, chairman and chief executive officer of Indymac Bank of California.

"This downturn is going to be tougher because we've been though an unprecedented period" of good times, Perry told about 6,000 Mortgage Bankers Association conventioneers. "Since the 1990s, the nation's homeownership rate has gone from 64 percent to 69 percent. That's 12 million new homeowners. Before the '90s, that homeownership rate hadn't moved in 30 years."

A media firestorm is ahead, he warned, and one target is the newer, more aggressive lending practices that lenders call "exotic" or "non-traditional."
...
Other speakers agreed that the next year or two could be rough for borrowers and lenders alike; after that, the housing market will stabilize and grow, courtesy of an infusion of immigrants and 20-somethings.

"It's going to be a fairly tough correction," said Dick Syron, chairman and CEO of Freddie Mac in Virginia, the nation's second-largest mortgage financier. "There's going to be a lot of heat about this, a lot of noise."

Four percent, of the approximately 80 million homeowner owned housing units, is 3.2 million homes edit: 50 million mortgaged homes is 2.0 million potentially lost to foreclosure in the "coming months" (thanks to Ellen1910 and Tanta for the correction).