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Mortgage Modifications Fail To Slow Foreclosure Rate

By Kurt O'Keefe, Attorney at Law

Proprietary mortgage modifications, not HAMP mortgage modifications, lead the way according to HOPE NOW Loan Mod statistics.

120,000 modifications have been done by the mortgage companies themselves, compared to only 27,840 HAMP mortgage modifications, compared to

HAMP has been, and remains, a gigantic government failure.

It was supposed to lower the foreclosure rate.

There are three kinds of lies:  Lies, Damned Lies, and Statistics.

Homeowners have situations like this: home worth maybe $200,000, first mortgage, $350,000, second mortgage, $40,000.

So how are homeowners like these faring, even if they get a mortgage modification?

How many monthly mortgage payments are lowered by at least 10%?

A whopping 55%!

Wow!

So, that means, out of the 150,000 total, about 70,000 did not even get 10% knocked off their house payment, even temporarily.

How does that help avoid foreclosure?

Ten percent would not make much difference to the Michiganders I talk to.

The number that puzzles me is, 22% of the mortgage modifications did NOT even change the principal/interest payment.

Were these folks stuck with the same payment?

People try for a modification because they cannot afford the house payment, to avoid foreclosure.

The rest of the story:  September, 2010, foreclosures started:  250,000.

September completed foreclosure sales:  120,000.

Folks now two months, or more, behind on their mortgage payments:  3.2 million.

This story did not even cover how many people have already defaulted on the mortgage modification they were lucky enough to get.

The completed foreclosure sales the banks have not even gotten around to putting back on the market, so called shadow inventory:  7 million.

At the current rate of home sales, it would take 40 months to clear all of these out.

And home values?

One prediction:  down another 7 plus per cent to next June.

Even if you are one of the rare persons who gets a mortgage modification with a principal reduction, more of your home’s value is probably going to just disappear.

So, get all the facts, assume your home’s value will continue to decline, look at it like you are buying your home again.

How much is it worth, and, how much are you paying?

Make an accurate budget, then make a decision about mortgage modification.

Mortgage Modifications Fail To Slow Foreclosure Rate

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Full post as published by Bankruptcy Law Network on November 08, 2010 (boomark / email).