Foreclosure Flood

By Diania Olick, CNBC Squawk Box [video]

In all the talk of recovery in the housing market, there's always been that caveat that foreclosers could either slow or even halt the recovery process.

There is a new wave of foreclosures coming and we thought it important to show you just how big it is.

If you take a look at the current bucket of loans that are in foreclosure, that's 3% of U.S. mortgages or 1.5 million loans in active foreclosure. That's the smaller bucket, as you see.

If you look at the loans on the precipice of foreclosure, being held by banks or slowed by various moritoria, that's 3.5 to 4 million loans, a much bigger bucket that is still growing.

"There are simply more loans that are experiencing trouble that are being (A) modified or (B) pushed into that foreclosure process," says Ted Jadlos of Lender Processing Services.

What's more troublesome are newer vintage loans, jumbo primes that were made after the so-called housing boom years. Just 12 months into these loans, they are defaulting at many, many times a faster rate than average.

"Even after the tightening of underwriting criteria, these higher quality loans that have been created in the last year, are running into trouble at a much faster rate than the same loans that were created years ago," Jadlos adds.

So, what about all of the modification programs? Those are working fine on the cases where the loan itself was actually the problem, like the sub-prime loans. But, the loans that are defaulting now are due to job losses -- and when you have no income there is simply no modification for which you will qualify.

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Worried about how these foreclosures will affect already troubled banks? Read:

FDIC Bank Watch List vs. My Bank Watch List