Tidal Wave Of Foreclosures Swells In May

July 7th, 2008 | Tags: Foreclosures

The tidal wave of foreclosures in USA swelled by 48% in May. The surge is causing many questions to arise about the claims of the mortgage industry of having done something positive to stem the tide. In May the foreclosure filings were nearly 50% higher than what it was in the previous year.

Across the nation at least one foreclosure notice was served to 261,255 houses. It is a spike of 48% from the previous year’s number of 176,137 during the same month. Also it is an increase of 7% from April. RealtyTrac has released the figures.

While the foreclosure waves swell and surge there is mounting criticism against the mortgage industry and the government for making a lot of noise but not showing any results. Hope Now has become a hopeless body. The Bush administration is being charged for consisting of a coalition government comprising of mortgage lenders.

Allen Fishbein, the director of credit and housing policy of the Consumer Federation of America stated that there was no doubt that the voluntary efforts by itself has failed miserably. No dent has been made. Government intervention seems to be imperative.

The chief economist of Moody’s Economy and advisor to Republican John McCain said, “The Bush administration’s efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.”

A report by Credit Suisse made this spring apprehended that nearly 6.5 million loans would be caught in the foreclosure net within the forthcoming five years. This will gobble up 8% of all the houses in the country.

These grim statistics are putting pressure on the government to intervene. The lawmakers are being especially asked to push through a plan that will guarantee nearly $300 billion for new loans to help the foreclosure victims refinance into affordable viable mortgages.

John Dugan, the Comptroller of Currency said that this federal body had conducted its own survey of foreclosures and loan modifications. It found “significant limitations” with the data collected by groups like Hope Now. None of the data had been stringently checked thoroughly. It tantamounts to “unverified results of individual firms.” The survey of the Comptroller showed that 2.7% of the seriously delinquent loans had been modified. This was an increase of 1.8% from November 2007. The mortgage industry has encouraged repayment plans that did not help much but only postponed problems for borrowers. Serious and genuine help should be in the form of loan modification.