Although the foreclosure pipeline is still jammed across the country, out west states are “digesting” their backlog more quickly than their eastern counterparts. In fact, in three of the hardest-hit states in the country, Arizona, California and Nevada, foreclosure rates dropped over the course of 2011. In New Jersey, Connecticut and New York, however, delinquencies and foreclosures rose as judicial procedures clogged the pipeline[1]. Herb Blecher, senior vice president at LPS Applied Analytics, said that it’s a tough call to say which scenario is better. When foreclosures stall due to judicial processes, there is a better chance for homeowners to ultimately stop repossession and keep their homes. However, when the foreclosure process is smooth and efficient, the housing market will likely recover faster.
Although delaying foreclosure does potentially help out homeowners, many abandon their homes long before the bank ever locks the doors. In these cases, slowing foreclosures down simply depresses property values by creating mass vacancies. Federal Reserve chairman Ben Bernanke recently described these empty homes as a “significant barrier” to economic recovery, and even suggested that Fannie Mae and Freddie Mac “assume losses on the homes to decrease supply”[2]. As more homeowners become aware of the massive delays in the foreclosure process, though, more are opting to stay in their homes and fight the process, sometimes even enlisting the help of organizations like local Occupy movements to protest their foreclosures.
Do you think that the foreclosure process takes too long? Not long enough? How can lenders best handle this issue to keep homeowners in their homes and heal the housing market?
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[1] http://www.bloomberg.com/news/2012-01-06/foreclosures-worsen-in-new-york-new-jersey-as-arizona-improves.html
[2] http://uprisingradio.org/home/2012/01/06/occupy-activists-stand-with-homeowners-facing-foreclosure/
The 50 Attorneys General all believe that fraud was committed by the foreclosers. No buts about it. In this, there is no debate. They are now merely discussing how to handle the collateral damage and protect the victimized homeowner.
The foreclosers would prefer that the victims curled up in the fetal position and not fight for their rights against the crimes that were committed against them. More and more, the homeowner is “occupying” their position in fight mode.
So, if the question is “how do we heal the housing market?”, there can be only two answers; either destroy the enemy through litigation or force them into out of court settlements wherein the victim maintains control of the real estate asset with affordable terms that will keep them in control without the threat of frivolous lawsuits and foreclosures.
We must stop criminal banking corporations from stealing homes from the consumer at all costs.
Vacant housing is abundant while families are forced to live in their cars, tents, homeless shelters. Some banks are foreclosing on borrowers who are actually paying their mortgage. In my neighborhood there is a man who fell two months behind on his mortgage… a year ago. He has paid the mortgage on time every month for 12 months since. He talks with a bank representative every month on the phone. The bank says he does not qualify for a modification or a refi. Last week the bank sent a notice to foreclose. It makes no sense to foreclose on a performing loan.
In many cases the banks sell foreclosed homes for a fraction of their investment and many times the homeowner could have remained in their home if that deal would have been offered to them. EVERY lender should be required to modify not just the rate and terms, but the principal on the loan to current market values.
Federal and local governments should buy up cheap foreclosure properties, create jobs rehabbing them, and offer programs for people to occupy them as they pick up the pieces of their lives. Most folks don’t want welfare…they want a chance to work for a living wage and take care of their own families. We should at least develop systems so those unemployed can barter their time, their energy and their skills in exchange for the basic essential needs of food, shelter, and medical care. We need to force the banks and the IRS to cooperate so these changes can evolve.
We bailed out Wall Street, for decades have sent troops to every foreign conflict, have doled out billions seemingly for every world wide natural catastrophy. So why can’t we put it in perspective and make a policy decision to redirect those foreign policy dollars to the crutial needs right here in the USA?