That’s what Laurie Goodman told the National Economists Club today in D.C. 7.2 million are already in the delinquency pipeline, and 250,000 are going delinquent each month bringing the total to 12 million. “Once you’re 60 days delinquent, a foreclosure is highly probable,” she said. Goodman is a Senior Managing Director of Amherst Securities and is widely recognized as the best housing finance economist on Wall Street.
She emphasized that negative equity is the main problem, and that any program which doesn’t significantly reduce principal won’t work. She estimated that under the most optimistic assumptions, President Obama’s HAMP program would avert 1.1 million foreclosures. Goodman added that banks aren’t renegotiating underwater mortgages in which they hold a second lien, “a huge conflict of interest problem.”
She noted that FHA loans are still the whole market and suggested that the homebuyer tax credit, due to expire at the end of this month, and other housing incentives have borrowed so much demand forward that the only way left to stimulate the market would be for FHA to ease its requirements and allow investors to participate.
Here is Goodman’s testimony before the House Financial Services Committee on December 8, 2009.