Foreclosures Still Seen Hitting Prices from Wall Street Journal

By JAMES R. HAGERTY

More waves of foreclosures will keep downward pressure on home prices in parts of the U.S. over the next several years, two new studies project.

The studies—by John Burns Real Estate Consulting Inc. and Standard & Poor's Financial Services LLC—both conclude that most efforts to modify loans with easier terms will delay, not prevent, the loss of homes to foreclosure.

The Treasury Department is expected to give its latest update this week on government efforts to avert foreclosures.

The John Burns study estimates that five million houses and condominiums on which mortgages are now delinquent will go through foreclosure or related procedures that put them on the market over the next few years. That would represent the bulk of the estimated 7.7 million households behind on their mortgage payments.

Orange County Register On Loan Modifications

The Orange County Register. “Are all these loan modifications we keep hearing about actually helping homeowners avoid foreclosure, and thus helping the housing market and economy? Tom Mitchell, a senior analyst who covers financial stocks at Miller Tabak & Co., agreed that banks’ modified loans may be skewing the picture.”

“‘We now have to consider the [modified loans] as a kind of shadow group of nonperforming assets,’ Mitchell said. ‘It’s reasonable to say that for most banks, if the loans had not been [restructured], they would have been nonperformers.’”