According to analysts, taxes, maintenance expenses and insurance for these foreclosures add up to approximately 2% of the unpaid mortgage balance a month. Since Fannie Mae says it now owns $5.8 billion worth of single-family dwellings, it will ultimately cost the company almost $1 billion a year to hold those properties.
Acording to RealtyTrac, which reports foreclosure information, banks sent foreclosure notices to one in every 464 households in the nation last month, and foreclosures had increased by a whopping 55% last month from the same period a year ago.
A major cause of the foreclosures? Many point an accusing finger at low teaser-rate periods on subprime mortgages made in 2006 and the first half of 2007, rates that have now expired. As new much higher – mortgage rates take over, overextended subprime borrowers, whose credit histories were shaky to begin with, are facing mortgage payments they simply cannot afford, for houses that are no longer worth the amount for which they are mortgaged.
More troubling, an increasing number of borrowers once thought of as rock solid are also defaulting on their mortgages. The fact that these borrowers are also defaulting indicates that the housing crisis has spread beyond the subprime sector.
In the first six months of the year, Fannie foreclosed on nearly twice as many properties as it sold. Fannie's and Freddie's expanding portfolios of repossessed houses are quickly becoming burdensome.