Foreclosures are at Their Lowest Point in Almost 6 Years

The end of 2013 arrived with a couple of surprises in tow, namely a massive stock market rally, the value of gold tanking to a 30-year low and foreclosures dropping to pre-crash levels in 2008. All in all nobody could have predicted this happening, no more than a handful of people seeing the crash of 2008 looming on the horizon before the rest of us ever paid attention to it.

A major development, of course, is that the number of foreclosures is decreasing on a national level, and finally coming to rest at what would be deemed "normal" levels. In effect this means that fewer loans and mortgages are becoming delinquent, which hopefully means that economy is in a state of recovery, at least temporarily. The US financial markets will be breathing a collective sigh of relief at this news because it means that the economy is now becoming more liquid than it has been in almost 6 years.

Obviously the news about job creation hasn't been just political spin because the only real reason for foreclosures slowing down is that there's more disposable income flowing through the economy so loans are being paid on time, which in turn means that fewer people are being forced to declare bankruptcy. In effect what we're seeing is an economical bubble which is slowly reinflating itself, under the watchful gaze of millions both inside and outside the government.

There are still more foreclosures on the horizon but this is a case of fiscal triage more than anything else. We need to be practical and realize that some debts are simply unsustainable and need to be restructured or dismissed.

What most media channels aren't discussing is that foreclosures have also slowed because some lenders chose to allow deadbeat borrowers to live in their home rather than foreclosing on it and having yet more real estate inventory they can't move, or at least they couldn't move until now. Now that there's some economic recovery we could see a short spike in foreclosures as the last of the deadbeat borrowers are removed from their properties and those same homes are then put back on the open market for other people to buy. That might seem harsh but the US economy needs to close this particular chapter of its economic history as quickly as possible.

Now with Janet Yellen at the helm of the Federal Reserve we have the next fiscal hurdle for the United States to cross however, although most financial analysts see the appointment of a new chair at the Fed being a good move, considering that the US economy suffered grievously while Ben Bernanke was guiding the Federal Reserve. That being said there are those who think that the days of the Fed are numbered because nobody wants to go back to the 2006 mayhem of uncontrolled borrowing and spending which brought the most powerful country in the world to its knees.

The good news is that we're seeing foreclosures down by up to 50% in most states, but the cynics among us are worried that this is just a manufactured reduction instead of actual proof of economic recovery. Only time will tell folks.