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RISMEDIA, October 1, 2009—It’s clear there are many more foreclosures in the real estate market’s future and we don’t need a fortune-teller to enlighten us on that score. What we do need, however, is to know the level of foreclosures being forecast over the next few years, as this will likely be a crucial component for strategic business and life planning activities. 

Fortunately, rather than having to engage a fortune-teller, we can use a report compiled by The Center for Responsible Lending, which projects foreclosures over the next four years and their impact by state. It allows us to take a peek at what will likely occur from 2009 through 2012. The projections show an estimated 2.4 million foreclosures will occur in 2009, with a total of 8.1 million from 2009 to 2012. 

While we’re still experiencing an unacceptable amount of foreclosures in 2009, even for the large U.S. market, the forecast appears to depict the beginning of the descent back to normal levels. These projected foreclosures will likely start the downside of the curve with a higher percentage of the 5.7 million foreclosures left after 2009, taking place in 2010, continuing to de-escalate into 2011, 2012 and so on, leading to a more reasonable level. We could see even lower foreclosure rates as court-supervised modifications rise. 

While it will take several years to return to a more typical annual rate of foreclosure, we appear poised to move in that direction. In 1979 the foreclosure rate was about .25% and rose to 1.25% by 2006, while bobbing up and down a bit in between. As the rate has been on a steady rise, it is difficult to zero in on an accurate, consistent rate. 

How can knowing all of this help you? If you are not handling REOs, then you can plan your business and consult with your clients accordingly for this timeline, knowing there may still be some devaluation of homes in various markets over the next few years. 

If your business is handling REO properties, some planning for a future when there are gradually less and less foreclosures, may make sense for you. Keep watching the numbers and your local market activity and adjust for your success accordingly. 

Chris Kaucnik is marketing director for Home Warranty of America, Inc. 

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