Top Financial Leader Thinks Second Wave of Foreclosures Coming July 1

Posted by Frank

June 10, 2008

“We have a wave of foreclosures coming after July 1, which may make the first wave look small by comparison.” - Sen. Christopher Dodd (D-CT)

Earlier this week, Senator Christopher Dodd (D-CT), Chairman of the Senate Banking, Housing, and Urban Affairs Committee, expressed his less than enthusiastic financial forecast for the coming months during a Securities and Exchange Commission (SEC) confirmation hearing stating, “We have a wave of foreclosures coming after July 1, which may make the first wave look small by comparison.” The first wave, which sent investors swimming, had enormous impacts on not only the housing and mortgage markets, but also student loans, municipal securities markets and beyond. What does a second wave starting July 1 mean for investors and consumers?

You may remember seeing Sen. Dodd in the news this past year as he attempted to oust Sen. Clinton and Obama out of the top spot for the Democratic nominee for President. Although he is not publicly known beyond this role, he is a man of men in the business community. The committee of which he chairs, has jurisdiction over nearly all financial services issues ranging from mortgage reform, financial regulatory restructuring, and nearly all investment matters. Not only does he have jurisdiction, but being the Chairman, any bill he introduces he can immediately markup in his own committee. What does all of this mean? Well, Sen. Dodd has power and the attention of financial leaders around the world. He is in the know and he knows a lot. For the reasons set forth, I believe his forecast for foreclosures after July 1 may be a sad reality.

As everyone knows by now, any bad news is having a negative effect on our economy. With gas prices and commodities up, consumers are strapped for cash and investors have their fingers on the trigger anticipating future losses. A huge wave of foreclosures could mean another buying opportunity for the buy-and-hold investors. It could also mean your home value will plummet yet again, with another house on your block falling prey to an ARM mortgage. The Federal Reserve may be forced to lower interest rates again, although the prospective of this seems slim at the present time. If they do, first time home buyers would be offered a great chance to snag a bargain at a bargain rate. Another wave has the potential to give our economy that final knockout blow that could leave no financial expert claiming we are not in a recession. Whatever the case may be in whatever situation you are in, Sen. Dodd has sounded the warning. I hope he is wrong and I hope we can continue to show signs that the worst of our mortgage mess is behind us, but if he is right, be prepared…$

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