NY's Proposed Foreclosure Moratorium: Too Early

Manny Fernandez reports that a pair of New York State lawmakers is attempting to implement a one-year-long moratorium on foreclosures. He illustrates the extent of the problem with this graphic:

Now have a look at what Hank Paulson said today:

Today, 93 percent of American homeowners - 51 million households - pay their mortgages on time. Many are on tight budgets, sacrificing other things in order to make that payment. Only 2 percent are in foreclosure.

According to Fernandez, his chart shows how nearly all of New York City - Manhattan being the obvious exception to the rule - is suffering from spiking foreclosure rates. But check out that y-axis: the worst-case scenario seems to be 8 foreclosures per 1000 homes. Meanwhile, according to the Treasury secretary, the nationwide foreclosure rate is 20 foreclosures per 1000 homes.

It seems to me that New York, while it's certainly being hit by the housing crisis, is actually faring relatively well for the time being. The big risk of the proposed legislation is that by the time the year-long moratorium is up, the situation in New York will be much worse, not much better. After all, we haven't even had a single year of falling Wall Street bonuses or employment yet.

And meanwhile, here's what's happening to condo prices in Manhattan:

I have a feeling that in a year's time things are only just going to start to feel really bad.

(HT: Ritholtz & CR)