Foreclosure Recap – Week #58
Job losses fuel record foreclosures in the first quarter as delinquency continues amid job losses and unemployment. Ten percent of mortgage holders are overdue on monthly payments by 30 days or more. The unemployment rate is at 9.7 percent, down only slightly from 10 percent in the first quarter of 2010, with the largest unemployment in Michigan, Ohio, and Illinois, traditionally known for strong labor forces. But today, the problem is not the cost of ownership as interest rates are very low, but the underemployed and the fear of losing one’s job. Prime borrowers with fixed rate mortgages saw foreclosures rise to .69 percent, and these are traditionally the best performing type of home loans. Under the Home Affordable Modification Program, or HAMP, 295,348 modified loans were completed at the end of April and 637,353 trial modifications were under way, with the Obama administration’s goal of 4 million modified loans be the end of 2010.
Even though California’s foreclosures have improved somewhat, Florida’s foreclosure rate continues to increase and Arizona and Nevada continue to be plagued by the specter of foreclosure. The first four months of 2010 found more homeowners in deep financial trouble than last year, and the inability for many to negotiate with their lenders is compounding the problem. As more people are discovering, modifying a loan can affect their credit, as will a home entering foreclosure, and the temptation to stop making payments for a home that is worth less than what is owed is growing nationwide. As more borrowers find themselves in financial trouble, lenders continue to become better at navigating the government foreclosure regulations and programs and are shortening the length of time to take back mortgaged homes for nonpayment, as lenders.
Modification loans by the U.S. government are revealed for being only moderately successful to more than half of those who apply for them; the number of failed attempts are about as many as the successful ones. Currently there are more than 6 million homeowners in the U.S. at risk of foreclosure, although only about 1.2 million borrowers have signed up for a trial or test loan modification. Taxpayer-funds are used to prevent foreclosures by shelling out government subsidies up to $10,000 per mortgage to both lenders and borrowers to reduce, and thereby modify, a loan. But some restructured loans are arranged as partial payments and that in turn can damage or diminish a borrower’s credit rating, so it is wise to have a knowledgeable attorney representing the borrower (not the lender’s attorney) review all documents in advance of signing them, just as they should have done before buying the house.
Busted: Foreclosure-relief scams selling services claiming a 90% success rate for reducing interest rates, monthly payments, and principal balances. Schemes were discovered and arrests made after some 1,500 homeowners nationwide lost at least $2.3 million. Other schemes for loan modifications exist, so people are warned for their protection to have an attorney represent them before agreeing to or signing documents. People need to be sure that they take the step of at least having their own attorney review documents to protect their interests, and not be swayed by some other party’s attorney. Crooks are preying on unsuspecting borrowers looking for a solution to their problems, and homeowners with no equity or negative equity in their home now make up about one in five mortgages in the U.S.
