Loan Modification

Seriously Delinquent Mortgages NOT Facing Foreclosure More Than Doubles

By Peter Orville, New York Consumer Attorney

Mortgages in default are taking longer to go to foreclosure.  In yesterday’s Washington Post it was reported that “During the first quarter of this year, the share of all homeowners seriously delinquent on their mortgage but not yet facing foreclosure more than doubled to 3.04 percent, or about $227 billion in loans.”  In 2008 there were “only” $97 billion in seriously delinquent mortgage loans that were not in foreclosure.  The 3.04 percent figure compares to less than 1 percent in the first quarter of 2007.

Some of the backlog is due to a slowdown in the pace of foreclosures.  Fannie Mae and Freddie Mac put a temporary moratorium on foreclosures late last year as did some other lenders. 

Housing prices are in a free fall across the country.  The Post article revealed that existing-home prices fell another 16.8 percent in May compared with a year ago.  Since so many more distressed mortgages are in limbo, it is expected “that foreclosure rates are likely to increase dramatically during the second half of this year and into 2010 as lenders work through the backlog.”  The likely result will be an even further drop in home prices.  

Full post as published by Mortgage Law Network on June 25, 2009 (boomark / email).