Consumer Law

Foreclosure Update

By Alan White

By Alan White

Two years into the foreclosure crisis, the problem is still getting worse.  July saw a new record high in foreclosure starts of 280,000 for the month, according to HOPE NOW.  Mortgages are entering the foreclosure pipeline at a rate in excess of 3 million annually, more than quadruple the pre-crisis rate of about 700,000 annually, or 60,000 per month (in the first quarter of 2006.)  Delinquencies also continue to rise, according to most reports.  Monthly foreclosure sales are also rising, although they remain at only about one-third of new foreclosure starts.  As a result, millions of homeowners have foreclosures hanging over their heads, but are muddling along in bankruptcy, payment plans, modifications or servicer neglect. 

Meanwhile, modifications are down.  Well, permanent modifications are down.  If we add the roughly 360,000 temporary Home Affordable plan modifications reported by the Treasury Department (May through August) to the permanent modifications reported by HOPE NOW, there is some cause for optimism.   The combined total would translate to roughly 180,000 monthly modifications, a 50% increase from the first quarter of 2009.  The problem is that we don't know how many temporary modifications will successfully convert to permanent ones, so it is too soon to judge the success or failure of the Administration's plan.  The acid test, of course, will be whether the foreclosure filings start to decline.  That may require some stronger medicine, including extended unemployment benefits, tackling the principal reduction issue, and other measures to address the multiple causes of the foreclosure crisis.

Full post as published by CL&P Blog on September 17, 2009 (boomark / email).