Foreclosures and Delaying the Day of Reckoning
Putting foreclosures on hold to allow time for lenders and servicers to work things out is a popular notion these days. Recently, both Fannie Mae and Freddie
Jul 31, 2020782 Shares260.6K Views
Putting foreclosures on hold to allow time for lenders and servicers to work things out is a popular notion these days. Recently, both Fannie Mae and Freddie Mac extended their holiday foreclosure suspension to Jan. 31, giving the companies more time to hammer out the details of their streamlined loan modification program. As TWI pointed outa while back, states from California to Massachusetts also have used 90-day holds or other delays in foreclosures to try to keep people in their homes.
But as we also noted, the delays don’t always work, and sometimes just kick the problem down the road. And Housing Wire weighs inwith more evidence that the stays aren’t effective. Just as a mandated 45-day delay in foreclosures ends in California, foreclosure activity is jumping right back up.
From Housing Wire:
“„Notices of Default, which represent the first step towards a foreclosure, rebounded sharply from an earlier stall caused by California State Senate Bill 1137, ForeclosureRadarreported. With 42,421 filings recorded in December, Notices of Default are back to the record levels reached in the second quarter of 2008, nearly doubling the 21,557 Notices of Default recorded in November alone. NOD filing levels in Dec. were 24.7 percent above year-ago totals, as well.
What does all this mean? Here’s Housing Wire again:
“„“The effort by the California State Legislature to reduce foreclosures has now clearly failed,” said Sean O’Toole, founder of ForeclosureRadar. “While State Senate Bill 1137 was well intentioned, forcing lenders to talk to homeowners won’t fix this problem. While a number of lenders have announced significant loan modification programs to reduce payments to affordable levels, these plans fail to address the fact that the average foreclosure in California now has $180,000 in negative equity. Lowering payments may provide a temporary fix, but lenders simply don’t have sufficient reserves to lower principal balances enough to help homeowners in foreclosure escape the prison of debt their home now represents.”
If this trend holds, it’s a grim one. Like we’ve said (and shown)before, nothing seems to stop the foreclosure machine.
Hajra Shannon
Reviewer
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