Bankruptcy

2011 may Be a Record Year for Foreclosures

By guest-writer

Much has been written in the last few years about the foreclosure crisis that took hold once the housing bubble burst. And, according to the Associated Press, this year will not offer any relief ? in fact, sources suggest, 2011 looks like it could see even more foreclosures than 2010 did.

1.2 Million Foreclosures Predicted for 2011

So why are news outlets and industry insiders predicting that 2011 will have more mortgage foreclosures than any year we?ve seen? A number of factors are apparently contributing:

• High unemployment: While the national unemployment rate has declined slightly since its peak of just above 10 percent, it?s still much higher than normal and millions of Americans without work are or will soon be unable to keep up with their mortgage payments.
• Plunging home values: Further, the crash of the housing market means that millions of homeowners are currently ?under water? on their mortgages ? in other words, they owe more than the home?s value and so have little incentive to pay their loans back.
• Delayed foreclosures last year: Another spur for 2011?s foreclosure season is the delays in foreclosure processing that happened at the end of last year: in addition to ordinary holiday moratoria on foreclosure proceedings, the robo-signing scandal halted foreclosures on many properties around the country. Those foreclosures that were delayed may now proceed normally.

A Look at the Numbers

So just how bad is the foreclosure crisis expected to get this year? The numbers provided by news outlets paint a pretty bleak picture:

• A reported five million borrowers are currently behind on payments by at least two months; without serious change in the employment scene, that number is likely to increase.
• It seems that as many as 2.9 million (that?s one in every 45) U.S. houses were in some stage of the foreclosure process last year. This could mean that the homeowners simply received notice of default or that the foreclosure actually took place.
• Apparently, five states are responsible for the bulk of foreclosures around the country, and insiders expect the pain to worsen in these areas: California, Arizona, Florida, Michigan and Illinois have reportedly accounted for about 1.5 million of the foreclosure notices received last year.

An End in Sight?

One source quoted in the Associated Press article seems to think that 2011 will show the ?peak? of foreclosure filings in the U.S., which could be taken for either a good sign or a bad sign ? 2009 and 2010 both set records for foreclosure volume.

And is there any hope if your home is nearing foreclosure? You may still be able to benefit from the protection of Chapter 13 bankruptcy (ask a lawyer for details), or perhaps from lowered mortgage rates. But many banks, it seems, are still less than eager to offer refinancing deals.

Full post as published by The Bankruptcy Blog on January 17, 2011 (boomark / email).