Foreclosures need not necessarily be inevitable. There are many escape avenues and options before the patient and persevering borrowing who is determined not to give up the house. The important fact is time. The earlier the action the better will be the chances of getting a reprieve, says Darren Hamm of Neighborhood Hosing Services, Greater Cleveland.
Attorney Timothy Kozlowski and Hamm participated in a seminar focusing on foreclosures at Medina District Library. Thomas Russell, of the planner services of Medina County, joined them. Kozlowski explaining the foreclosure procedure to 50 people attending the conference, stressed the importance of taking prompt measures. He handed out a sheet to all with the headlines “A typical mortgage foreclosure lawsuit time line can play out in less than 180 days! Do not wait! Act now to save your home.”
As soon as the borrower fails to make a monthly mortgage payment the best thing is to contact the lender and or the local counseling group like Neighborhood Housing Services. The MERS or Mortgage Electronic Registration System complicates the matter by drawing in more players – the borrower, the mortgage holder, the lender, the guarantors and the insurance firm.
The securitization process is another hurdle. By it many mortgages had been made into packets and sold to distant investors. These had passed through Federal National Mortgage Association of Fannie Mae and Federal Home Loan Mortgage Corporation or Freddie Mac.
When the borrower fails to make payments for 90 days the lender can proceed with foreclosure with the help of the court.
Taking all these into consideration the advice is not to delay. Paperwork should not be ignored. Help must be sought. The best port of call is HUD certified counselor. Talk. The mantra is talk to the banker, talk to the attorney, talk to the mortgage servicer and ask to be linked on to the Loss Mitigation department and specifically not the Loss and Foreclosure Department. After all the aim is to prevent or bring down the loss both parties incur in the case of foreclosures. The lenders will respond. Foreclosures spell loss for them also.
The courts too are lenient towards mediation. Help may be taken of the clause pertaining to Leave to Plead that will allow for 28 days extra grace to thrash out the matter.
The borrower may make a counter allegation of fraud or negligence against the lender. In the foreclosure atmosphere today the dominating mood is that of mediation from all sides.
Making records 1.2 million houses have been engulfed by a fresh surge of foreclosures during the second quarter of 2008. It accounts for 2.8% of all mortgageloans. It is a spike from 1.4% of the previous year according to Mortgage Bankers Association. Delinquency rates are continuing to soar pointing to grim days ahead. The MBA has been keeping data on foreclosure and delinquency since 1979.
The MBA has in its kitty 45-million house mortgage contracts. Of these 490,000 are new entries into the foreclosure zone. In the previous quarter the number was 448,000 marking an increase of 9% in the recent quarter. It is the 7th running quarter of foreclosure increases.
The delinquency numbers are also high. A mortgage loan becomes delinquent when at least one payment has been missed. It points towards the inevitable foreclosure. During the first six months of this year 2.9 million house owners or 6.4% were lagging behind in their mortgage payments. This is an increase of 25% from the previous year.
The national numbers are affected mainly by the figures rolling in from the hard hit states like California, Florida, Nevada, and Ohio etc. The position is worsening also in Texas, Massachusetts and Maryland as well. California and Florida together were responsible for 39% of all the foreclosures that began during the second quarter. The numbers in Rhode Island and Indiana too were much higher than the national average.
The sub-prime mortgages continue to sink into foreclosure. It accounts of only about 6% of all the mortgages but is responsible for 36% of all the new foreclosures of the second quarter. It meant 6.65 of the sub-prime (ARM) slipped into foreclosure during these months. It is 20 times more than the number of prime mortgages that have tripped.
Statistics show that the foreclosure crisis has “long since stopped being just about sub-prime” said Mike Larson of Weiss Research. Some of the delinquencies from prime mortgages increased to3.9% from 3.7% during the first three months of this year and 2.7% from the previous year during the same months. He said, “This is the highest reading yet.” The fear is that even if the sub-prime stabilizes it will be overtaken by the prime mortgages keeping the general foreclosure picture the same. The problem relates to the general economy and a much broader scenario.
The only ray of hope is that the fall in the price of houses has paused recently.
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