“Foreclosure-gate” might have forced the banks to slow down, but foreclosures march on. While many have blamed the banks for not trying hard enough with loan mods, it’s clear they aren’t the answer- here’s why: [Thanks L!]
All told, foreclosure activity jumped in 149 of the country’s 206 largest metropolitan areas last year, foreclosure listing firm RealtyTrac Inc. said Thursday.
The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.
Job loss, rather than time-bomb mortgages resetting to higher payments, has become the main driver behind rising foreclosures.
“We’ve actually had a sea change in what’s causing foreclosures, from the overheated home prices and bad loans to a second wave of foreclosures actually caused by unemployment and economic displacement,” says Rick Sharga, a senior vice president at RealtyTrac.
When a family’s income disappears, loan mods don’t work. In many instances families continue to walk away from their homes. Not because they can’t make the payments– often they’ve gone some time without a payment, but because they can’t even afford to keep the lights on.
People are noticing that loan mod programs aren’t working, and there is an increasing demand to end these programs:
Neil Barofsky is on the warpath again. This time he’s taking on the Home Affordable Mortgage Program, better known as HAMP.
That’s the Obama Administration’s bid to stem the flood of foreclosures by enticing lenders and mortgage servicers to modify loans.
Well it has been a big flop, Barofsky, the blunt spoken special inspector general appointed to ride herd over the government’s $341 billion bank bailout program, told Congress Wednesday. After two years, only a fraction of the millions of homeowners facing foreclosure stand a chance of receiving any help under HAMP.
But as interesting as Barofsky’s icy blast was the response of a trio of House Republicans, who immediately filed a bill to scrap the program and save the last $30 billion in bailout money.
t does seem possible that the administration will back away from loan mods. Look at what he had to say about foreclosures in his State of the Union address— absolutely nothing.
The President didn’t utter the “f” word (foreclosures) even once last night. It’s as if the issue doesn’t exist at all for him. Perhaps in the Olympian world of his advisors and spin-doctors, it really doesn’t exist – it’s only something of concern to people in flyover country. Or maybe the folks in the West Wing somehow missed Senator Jeff Merkley’s eloquent appeal for the President to talk about foreclosures.
Same goes for the issue of US bank closures, especially closures of community banks.
Sometimes what isn’t said says more than what is said. What could the president say about his “save homes from foreclosure programs”? They’ve been a flop, just as the homebuyer’s credit was.
The only thing that is going to save the day for housing is a better job market, and time for prices to fall where they belong. That level is not determined by falling back to the trend, or to “historic affordability levels”. The proper price for housing is going to be determined by supply and demand, which is likely below trend and at even more affordable levels.
It is said that government will do the right thing after exhausting all other possibilities. Maybe they are going to finally do the right thing to fix housing. That’s right. Nothing.