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Is There A Silver Lining In The Newest Nationwide Foreclosure Record?

Given the current state of affairs in the mortgage lending industry even a skewed bit of good news is a welcome change to previous years gloom and doom prognostications. While the Mortgage Bankers Association recently reported yet another record number of mortgage loans falling into foreclosure during the second quarter this year it was quickly pointed out that four states, Florida, California, Arizona, and Nevada contributed the lions share to the final tally.

In fact, the MBA stated that if not for those four states the number of foreclosures nationally actually showed a decline.Thirty-four states reported decreases in new foreclosure filings, and those states reporting increases claimed the climbs were modest.  

Still to blame for the bulk of the foreclosure problem is the impact of the adjustable-rate mortgages sold during the heyday of the real estate market. Some experts believe the worst is yet to come as almost one-billion dollars in adjustable-rate mortgage loans are yet to reset between now and the end of next year. The four states mentioned as the leading contributors to the newly set foreclosure record between them account for over one-third of the overall filings. What might be ahead?  As government regulators and lawmakers created newer, more stringent, laws and guidelines for credit and lending practices the availability of credit has become more constrained. As a consequence borrowers trying to stop foreclosure by refinancing are finding limited options open to them. 

Lending standards will continue to tighten. This coupled with the current glut of homes available will continue to fuel the existing housing recession. Overall unemployment numbers are up nationwide. How this may affect the performance of sub-prime mortgages has yet to be determined, but if a person cannot find employment it stands to reason that mortgages can’t or won’t get paid. 

It may well be that the majority of the states have seen the worst of the crisis, but the four states driving the problem may tip the balance either way. The crystal ball isn’t clear on this matter but if mortgage resets and unemployment continue to increase you can draw your own conclusions to the outcome.  In the meantime until a rebound is noted, the best one might expect is for lawmakers, lenders, and consumers to continue working on ways and means to work around the immediate foreclosure problem.

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As Foreclosure Numbers Increase Nationwide Distressed Homeowners Find Fewer Remedies

The numbers are impressive and also oppressive at the same time. Over 600,000 foreclosures were reported between January and July of this year and there are no signs of the trend slowing up.  

Since the beginning of the crisis lenders have made it clear they do not wish to own any property, yet as the qualifications for loans and credit rules have become far more stringent homeowners are now faced fewer and fewer options for dealing with them. Lenders are overwhelmed and many are offering little, if anything at all, in the way of answers to the problem.  

Research reports that only about half of the homeowners facing foreclosure make the call. Of those that do contact their lender at the first sign of trouble they are reporting that many lenders are unsympathetic and non-responsive. Many are reporting being placed on hold for over an hour, being shunted around from department to department in a perpetual shuffle trying to speak with the right person, getting dropped during transfers or finding full voice mail boxes.  Adding another twist to this story is the concern over those mortgages bought by foreign investors. These fall under globalization rules which make it difficult to alter a loans term. Many of the mortgages sold in the secondary market are reporting some of the highest default rates.

What has to happen before a turnaround in the current foreclosure crisis can begin a turnaround? Lenders that were slow on the uptake in dealing effectively with distressed borrowers need to implement better lines of communication. Homeowners facing a possible home loan default and looking to avoid foreclosure are going to have to be more proactive in contacting their lenders.  In the meantime thousands of homes are going into foreclosure across the country with several months left this year to set yet another record.

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