Hoosiers Harangued by Foreclosures Are Desperate to Stay in Their Homes

January 21st, 2009 | Tags: Foreclosure Notice

As the economy slips further into gloom, the Hoosiers harangued by foreclosures are desperate to stay in their houses that are their homes. They are either lowering or delaying monthly mortgage remunerations to keep the wolf at bay.

In mortgage parlance a new word for modification has been coined – ‘mods’. It is the key factor in putting off foreclosures. The state registered a whopping number of 100,000 foreclosures in 2008 and was one of the major contributors to the sinking of house values across the nation.

Across the state there were 5,000 modifications of mortgages during the third quarter of the previous year. It was four times more than the numbers during the same period in 2007 according to the findings of Homeowners Preservation Foundation.

The lenders have woken up to the fact that modifications are the best option in the present economic climate. According to a study by Alan White of Valparaiso University School of Law, the owner of the mortgage has to suffer on an average, 55% loss on the loan balance if the foreclosure route is taken. For lenders the modification is not always good news. Half have ended up by paying more and little wonder then that many are defaulting again on the modified loans.

Tabitha Madsen however, is one of the many who is happy with this chance to keep her home. This last minute modification done with the help of a credit agency has saved the house in Southside Indianapolis from facing the sheriff’s auction. Madsen thinks this to be Christmas gift for herself and her two children. During a spell of joblessness she defaulted in her mortgage payments of $386 per month. The new agreement permitted her to repay the backlog of one year at the end of the loan period. Thus she avoided an immediate pressure of paying $1,800 to catch up with the arrears.

Many housing experts are critical about the steps being inadequate for the foreclosure victims. The lenders however are pushing for modifications – something they had shied away from previously. For lenders it had been a little known practice. Jon Meade of Fifth Third Bank said, “We are willing to put some skin in the game. We are willing to give (interest) rate concessions to get the customer to a surplus situation.” He adds that the way the bank is handling delinquent mortgages “looks nothing like it did years ago.”