Why Are Foreclosures Continuing If Mortgage Delinquencies Are Really Declining?
Statistics have shown in recent months that the number of mortgage delinquencies has dropped to 9.13% according to a report released by Mortgage Brokers Association. This statistic at face value appears to indicate an improvement in the mortgage delinquency situation. However this statistic is misleading because it is a result of properties being repossessed and not the fact that homeowners actually paid off the loans.
The foreclosure rates are slower to show any improvement due to the number of delinquencies that are still in the pipeline that will become foreclosures eventually. A lot of the foreclosure servicers are also waiting longer periods of time before signing the foreclosure repossession orders. It appears as if they are waiting to see if the homeowner can pick up the pieces or if the economy will improve enough to balance the mortgage and foreclosure scale.
Unfortunately the homeowners will be unlikely to be able to continue paying the already delinquent mortgages as the job market continues to lag behind. The unemployment rate remains steady at 9.5% and there does not appear to be any signs of improvement on the horizon. The government has already extended employment benefits several times in an attempt to provide some relief to those out of work, however this will do nothing to help those homeowners who are in foreclosure or behind on their loan payments.
In addition the recent robo-signing scandal has not helped matters and some officials warn that a nationwide freeze on the foreclosure market could further weaken an existing delicate housing market and extend vacancies. Now that homeowners are being allowed to stay in their homes longer and the foreclosed homes have been taken off the market as a result of this scandal, this has also made it impossible for new home purchasers to buy the homes.
There are a few good things which will come from the mortgage loans and foreclosure problem. With the mortgage rates down homeowners may be afford to get new loans and possible pay off loans sooner. Low mortgage rates have also attracted outside investors who have been helping to decrease the foreclosure rate by purchasing those foreclosed homes that are still available on the market.
Also with a freeze on foreclosure proceedings in some areas, this means that homeowners get to stay in their homes for a longer period of time before they must move to other more affordable housing. This may give them an opportunity to get back on their feet and pay down some of the outstanding loans. The government may also soon be implementing measures to force the banks to work out an agreement with the homeowners instead of just forcing them out. In addition some, but very few homes, may not be foreclosed upon at all due to the robo-signing scandal which may have resulted in some homeowners being erroneously or illegally forced into foreclosure.
However some stimulation will be required in the job market in order for things to completely turn around as the high unemployment rate continues to feed the delinquency problem.
[...] foreclosure problem in Chicago has also spread to its neighboring areas such as Austin. According to Michelle [...]