Foreclosures Increase as Housing Rescue Pace Decrease

July 7th, 2008 | Tags: Foreclosures

It is a sad picture for the communities and the country. In the seesaw the foreclosures are increasing while the housing rescue pace is decreasing.

Hope Now is an alliance consisting of mortgage lenders, their servicers, counselors of housing backed by the Bush government. It claims to have helped 170,000 stall foreclosures in May. Compared to the increasing rate of foreclosure entry it is not much to crow about. In April there had been 183,000 loans rescued. However Hope Now calculates that since July 2007 it has kept 1.7 million from the jaws of foreclosures. The decrease in rescue numbers is not because of any lapse on the part of the alliance. Hope Now expects to match the pace in June

The proportion between loan modifications and loan repayment more or less remained constant from April to May. 60% were repayments while 40% were modifications. Repayments are considered to be the best option and most effective for those borrowers who are facing temporary hurdles like unemployment. Housing counselors opine that repayment loans by itself do not have the power to keep the foreclosure wolf at bay because it does not bring down the pending dues. It only gives the borrower some time to return the dues that are pending in addition to the running mortgage commitments. If basically the loan is bad then it does not help the borrower, commented a spokesperson for Centre for Responsible Lending.

Little wonder then that very few are satisfied with the progress of Hope Now. The main focus of concern is the alarming rate of foreclosures rushing in. From April to May the number of foreclosure victims fell by 7% while the houses gobbled up by foreclosures increased by 35% touching the record number of 73,000 during this period. Foreclosure filings also jumped – this time by 7% in this span of time. Experts feel this trend will continue for the following 18 months.

Hope Now stated that 718,000 loans had been ready to be reset between January and May. Of these 5.3% calculating to 37,700 had undergone modification. This meant that the mortgage contract had been revamped. Some of them (64%) were modified for at least 5 years. Hope Now does not detail the type of modifications. It is also stated by the alliance group that 45% of the sub-prime loans (323,000) were fully repaid either by refinancing or sale of property.