Unprecedented Increase In Foreclosures

Posted on March 7th, 2008 by saman

An ever-increasing number of borrowers were unable to pay up or keep up their mortgages. As a result of this, more than 1% of borrowers slipped into foreclosures. 2.2 million fillings were seen in 2007 when US foreclosures jumped up to 75 %. The foreclosure activity sped up in 2007. The sudden increase in foreclosures was seen to be fast declining, which is not true as December was the fifth trading month to have more than 200,000 fillings.

There is no sign that shows any decrease in the rate of foreclosure activity. It is expected that the number of foreclosures will rise, because of a new trend that the adjustable rate mortgages industry‘s worst performing loans are expected to rise. The number of foreclosures filing will not drop, as low quality loans will move up in the system.

The highest increase in foreclosure of the year was in Nevada, followed by Florida, and then by Michigan. In the top ten were California, Colorado, Ohio, Georgia, Arizona, Illinois and Indiana. In 2006, there was a 215% increase in Nevada, as there were 66,316 foreclosure filings on 34,417 properties.

This is a result of high-rise of lending and a frenzy of real estate speculation. In 2007, Nevada had 3.4%of households in foreclosure. The second highest foreclosure rate was in Florida as 2% of households entered some stage of foreclosure. In 2007, there was third highest foreclosure rate in Michigan.

In California foreclosure agents remained busy throughout. In this year the highest number of total foreclosure filing were seen in California. This includes 481392 default notices, and 249513 homes on bank reposition and action. In 2006, the number tripled and the foreclosure rate was the highest: a 1.92%. The specialist of bank owned properties, Southern California Realtor Leo Nordine, had more listings, so he decided to decrease his business activity to about half is earlier share. After 2006, it was a steady increase.

The aid from government is yet to come. In the US, half a million and three quarters of a million bank owned properties is expected to come back in the market. The state intervention further aggravated the situation. There was not any hope that the activity will decrease the foreclosures. Homeowner’s loans were not financed, as they did not qualify for it. This is a voluntary program and this program has no requirements to submit the result of their analysis to worried borrows.

The refinancing was unable to make any progress. There were problems faced by State Run Counseling and Refinance Program, when borrowers did not get the calculations done.

The director of Pennsylvania Housing Finance Agency, Brian Hudson, is initiating a program to refinance struggling homeowner’s loans, which amounted to 29 loans. There have been difficulties in resolving the case with the current service and investors.

The activist groups have changed laws forcefully very fast. There are reforms that are pushing the activist groups to give a chance to borrowers that have been defaulted to work with the lenders. Activist groups are pressurizing to change laws even further. Adequate reforms are suggested to give genuine borrowers an opportunity to work with their lender. If that works out, it could be a real blessing for the troubled borrowers.